05 Feb 2018 2 min read

The cost of going to university in the UK has risen sharply

By Robin Martin

The cost of going to university in the UK has risen sharply; at £9,250 a year, tuition fees are more than three times the level of five years ago. Student accommodation costs, too, have moved higher; but is there an online solution on the horizon?


The Massive Open Online Courses (MOOCs) which distribute lectures online, usually for free, are being talked up as providing a solution to the rising overall cost of higher education. Do they spell the end of the traditional on-site university? Does this mean that purpose-built student accommodation might become obsolete?

We don’t believe the hype — at least not all of it.

Education is about more than making knowledge available. Students consistently report that they want more not less time with their tutors. Equally, working with fellow students is increasingly seen to be important in developing the team skills that employers need.

Of course, there’s a broader, human point here as a deputy vice-chancellor at a leading UK university put it to me recently: “Young people want to be with other young people.”

Moving away from home is a rite of passage for many 18 year olds and many educators say that for undergraduate students, the on-site student experience includes learning how to manage themselves, their time and keep motivated.

“Young people want to be with other young people”

Maybe it’s no surprise that at the moment, most students learning remotely or online are in their 30s and 40s, in work and already have a first degree.

But it’s wrong to think that technology isn’t changing the sector; quite the opposite in fact, with universities rolling out blended courses, which mix digital and physical content, and using ‘flipped learning’, where lectures are viewed online and face time is kept for seminars.

In one extreme example, the University of Northampton is rebuilding its campus without a single lecture theatre and the University of Keele has built a virtual hospital simulation to teach nursing.

However, there could be less reliance on studying onsite as a default choice

As real estate investors, where might we see distance / online learning substituting for on-site courses and therefore threatening demand for student accommodation?

There are some red flags that we look for:

  • Universities with a major dependence on taught postgraduate courses. With students who already ‘know how to learn’ and might be saddled with debts from their first degree, they may look much harder at whether the costs of studying on-site make sense
  • Universities with a bias toward courses which don’t rely on face-to-face contact or specialist facilities that are hard to replicate in virtual environments

On the flipside, there’s the possibility that there is less reliance on studying onsite as a default choice in the future.

Universities are going to need to work harder to demonstrate the quality of on-site teaching; the gold / silver / bronze ratings that have been introduced in the UK are likely to be just the start. And the broader appeal of a university location is going to be even more important.

The social and sporting opportunities, the quality of the facilities and the wider town or city are all likely to be more important in motivating students to follow the traditional path and therefore important considerations for investments.

Universities are going to need to work harder to demonstrate the quality of on-site teaching  

Student accommodation has attracted a great deal of investment capital in recent years. But not all assets are created equal and delivering resilience tomorrow is going to depend on building this thinking into portfolios today.


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Robin Martin

Global Head of Investment Strategy & Research, Real Assets

Rob is Global Head of Investment Strategy and Research for Real Assets, having joined LGP in October 2006. Prior to this, he worked for Hammerson as Head of Research, working closely with the board and senior management team on corporate, sector and asset strategies. Prior to Hammerson, Rob was at CBI for two years as a senior economist, and prior to that, he spent three years in the petroleum industry. Rob has a degree in economics and economic history.

Robin Martin