Real Estate Blog

The UK's universities - 5 ways they benefit the economy

Back in 1900, university enrolment totalled just 1% of the world’s younger generation. Over the next 100 years or so this had expanded to 20% globally – proof positive of the continuing importance of higher education in any modern society.

Over that time, the UK government has consistently invested heavily in the sector, and we now have one of the highest ranked university systems in the world. We are home to four of the world’s top 10 higher education institutions, and nearly 20% of the top 100.

No surprise, then, that the total UK student population is currently twice what it was in 1992 at 2.3 million - it’s also the world’s second most popular destination for overseas students.

Below, we look at five of the key reasons why the UK government has invested so heavily in the sector and what benefits it brings:

  • Important for the economy

Higher education is worth around £17.5 billion to the UK economy, with our 135 universities employing 410,000 people.

To put that in perspective, they contribute four times more than agriculture to the UK’s GDP, according to Universities UK.

  • Important for global relations

Political and business graduates from all over the world have received their further education here. Many maintain close links with their old universities and the people they studied with. This ‘soft power’ is hugely beneficial to our society, our foreign policy and our economy.

As an example, since 1945 Oxford University alone has been alma mater to 45 future Heads of State from 25 different countries.

  • Important for inward investment

The UK is one of the world’s leading destinations for Foreign Direct Investment (FDI). Our universities help ensure that we have a deep talent pool available nationwide to overseas enterprises.

UK universities are also a globally recognised and respected source of research and are vital to creating the industry hubs and innovation hotspots that investors seek.

  • Important for the national skillset

Universities help to generate economic growth by building ‘human capital’ – a skilled workforce across all disciplines.

This benefits individuals too, with graduates in the UK earning £9,000 per annum more than non-graduates (Department for Business, Innovation and Skills).

  • Important for regional growth

Universities contribute massively to their local economies, with investment programmes rejuvenating urban areas and driving development.

They buy local goods and services, boost employment and encourage growth both by improving the qualifications of students from the area and by stimulating economic development.

And of course, students spend a lot of their money off-campus, which is good for local trade.

They’re important to property investors as well

Such a large student body requires a lot of dedicated accommodation, but after four successive years of record intake, student property is increasingly at a premium.

Buy-to-let residential housing is coming under increasing local and central government pressure, and traditional university halls of residence were never expected to have to cope with such an explosion in student numbers. Even the supply of modern purpose built student accommodation is struggling to keep pace with demand.

And of course, where there’s unsatisfied demand there’s an opportunity.

James Harrington, Business Development Manager at student property specialists Emerging Property comments: “At a national level, only 26% of students have access to what is their accommodation option of choice – and that figure can be a lot lower in some prime regional locations, which is where we focus our development activities.

“As a result, buyers can rely on 100% occupancy levels, NET yields of 8-10% contracted income for 10 years and up to 40% capital growth at resale.”

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