Cities with high graduate retention rates should be a factor when deciding on your next UK property investment. That’s because many students staying to work in their new city will turn to the private rented sector for accommodation – and, in many locations, are faced with low levels of supply.
Figures released by Knight Frank in its recently published Student Accommodation Survey 2021 show that graduate retention is increasing across the UK.
Historically, regional UK cities see a high migration of students attending their universities, but it is London as the capital city which then sees the highest influx of graduates.
While London’s graduate retention rate naturally remains high today, the Knight Frank report noted a significant rise in retention levels in regional UK cities in 2020:
- The graduate retention rate in Birmingham is now 46%
- 12 months prior Knight Frank reported this at 40%
- The graduate retention rate in Manchester is 43%
As cities expand economically, retaining its best talent and adding new talent to its workforce is essential. Consequently, it’s imperative that local property markets have enough supply to house these new workers.
“A city’s ability to retain skilled graduates will depend on the availability of vibrant, amenity-rich, flexible living space for those workers in the right areas and at the right cost.”
Knight Frank
According to this new report, 46% of final-year students – some 235,000 people – intend on moving directly into a property in the private rented sector in their city following graduation.
For UK build-to-rent property investors, this presents a huge opportunity. With purpose-built rental property regarded as the modern rental solution, this type of housing is highly desirable to young city centre workers.
“Delivering homes built specifically for the private rental market, be they co-living or build-to-rent, will ensure the convenience and quality of housing these households need in locations they want to be,” stated the Knight Frank report.
Both Birmingham and Manchester have two critically undersupply rental markets in their respective city centres.
In Birmingham, it’s estimated that 4,450 new homes are needed each year just to cope with current demand. While in Manchester, online property agent Zoopla suggests that there is 5:1 demand to supply ratio of rental property in the city centre.