Governance News Alert: Association of University Directors of Estates (AUDE) Higher Education Estates Management Report 2025

The report provides a summary, insights and analysis of data from the Higher Education Statistics Agency (HESA) Estates Management Record 2023/24, which was submitted in the first half of 2025. As well as sector level analysis, it examines the data by categorising universities as large or small, research intensive or teaching institutions. The report also includes contributions from experts and estate directors from across higher education, drawing on information from AUDE’s 188 university members. 

The full report can be found at: AUDE : Association of University Directors of Estates

At a glance: 

• For a third consecutive year, overall property costs have continued to outstrip the level of inflation – a shift from the long-term trend that held until the early years of this decade. The cost of energy is the chief driver of this new trend, but rises in other property costs such as repairs, maintenance, cleaning, and insurance have also contributed. Many institutions are reaching the conclusion that the overall size of the estate has to shrink if property costs are to be reduced effectively.
• Meanwhile, income growth has dropped to 4 per cent – its lowest level since the first pandemic year of 2020 and down from an annual rate of 6 per cent over the last decade. During the last three years inflation has eaten into this income to such an extent that there is now “little or no real income growth for many universities”.
• In the past year, postgraduate student numbers have fallen by 7.9 per cent, while there are around 25,000 fewer overseas postgraduates (representing a 6.8 per cent drop) – bringing an “instant and irreplaceable hit to overall income”. Overall postgraduate student numbers in research-intensive institutions have dropped by 6 per cent, while in teaching institutions they are down by 9 per cent.
   
• Two of the clearest imperatives arising from these latest trends are a need to ensure greater efficiency in the way universities use space and consume energy. For some institutions, a reconfiguration of their approach to estate management is needed, as the sector sets about identifying the purpose, contribution and ongoing need for each building. A shift from the intense focus on space and costs, over to assets and values, is required to remove liabilities from estates and fully explore their untapped potential.
• University leaders, governors and estate managers should note the possibility of further expense and complexity relating to the upcoming Terrorism (Protection of Premises) Act - known as Martyn’s Law - which comes into force in the UK from 2027, along with the new Buildings Safety Regulator which has been part of the Health and Safety Executive since its inception in 2022.
• Exceeding £2.5 billion in the 2023/24 academic year, capital expenditure remains significantly below ‘normal’ pre-Covid levels, but it continues to result in the growth of the size of the university estate across the UK. However, it is likely that capital expenditure will start to reduce over the next year, with projects being put on hold or cancelled entirely.
• A lack of repairs and maintenance appears to be leading to a decline in the overall condition of the higher education estate in the UK, with the percentage of academic estate in best conditions A and B seeing a slight reduction, while there has been a 3.4 per cent increase in buildings rated as condition D ("poor").
• There has been a sustained four-year reduction in energy consumption and a consecutive four-year decrease in energy generation via combined heat and power (CHP) systems, alongside a third consecutive year of increased renewable energy generation.
• Residential and catering income has increased from last year and has now completely recovered from the significant dip during the Covid years. For many universities, this income is quite significant, with 24 institutions generating more than £40 million per year.
• However, costs per bed have continued to increase, with significant rises in energy costs per bed (up to £692/bed in 2023/24 from £398/bed in 2021/22).

Implications for Governance

In his introduction to this year’s AUDE report, Professor Andy Schofield, Principal and Vice-Chancellor of the University of Glasgow, argues that the need for university leaders to be critically aware of their institution’s financial position and the underlying trends and drivers has never been greater. And with university property prices continuing to outstrip inflation, “it becomes even more important to understand them as we look at our options for steering our universities through the financial storm”, he adds.

The report compares the challenges that this brings, along with other factors exerting growing pressures on university estates, to a high stakes version of the computer game Tetris – as managers attempt to fit “blocks” of property often of an unsuitable size and shape into ever-changing “slots” of provision and demand. For some institutions, a complete rethink of their approach to estates management may be needed in order to emerge a winner in this seemingly impossible game, it suggests.

Three recent changes have brought about this crisis situation: rising property costs, stagnant real-terms income growth, and a dramatic drop in the intake of postgraduate students – including a 6.8 per cent fall in the recruitment of overseas postgraduates. 

In this context many, if not all, universities are taking a long, hard look at the amount of space they need. ‘Rightsizing’ is a concept that suggests many universities have estates that are simply the wrong size for their operational requirements, and there’s no longer a close alignment between core activities and the space needed to generate the income that allows the university to deliver what it wants to.

In order to effectively take on this challenge, the sector has to understand the use of space better, the report argues. Some universities have relatively advanced digital data capture methods for space use, and they are able to show at a granular level how any particular building is used at any given time. Others rely on more manual methods of measurement and analysis. But no matter where any particular institution is on the path to digital maturity, it has to start with the data it has, and "increasingly governance committees are regarding the position revealed by this data as indefensible", the report warns.

Citing Cardiff Metropolitan University’s “Halve the Half” initiative, which found that more than half of university energy consumption (55%) occurs outside the Monday to Friday, 7am to 7pm period, the report calls on institutions to tackle a likely mismatch between occupancy and energy consumption. Taking on this issue, however, may require institutions to “grasp some cultural nettles”. 

Firstly, this may involve a move away from “territorial exclusivity” in estate management towards "central transparency allows us to find opportunities to use what we have more efficiently". Secondly, a shift from the intense focus on space and costs, over to assets and values, is required to remove liabilities from estates and fully explore their untapped potential, the report suggests. “The juncture that the sector’s estates have now reached requires a much more dynamic approach to consolidation and exploring and realising the full potential that excess estate may have in commercial market settings,” it adds.

The report acknowledges that the inherent degrees of illiquidity with university estates add complexities to the task of rightsizing. The wrong building in the wrong place may be costly to sell, requiring investment upfront to get it onto the market. "Rationalising our space will take a long time to deliver and needs significant capital expenditure upfront, as well as being enormously disruptive. But we have to consider difficult options," the report argues. "An eventual successful disposal, perhaps with commercial consent secured for a different type of future, avoids years of maintenance and facilities costs on a building we can see isn’t used to anything like its maximum."

Any dramatic changes will also have to factor in current and expected changes in student intakes and demographics. Not only is the sector experiencing a sharp drop in postgraduate recruitment, but the current UK demographic upward trend for homegrown undergraduates is only forecast to last until 2028.

Preparing for the impact that changing demographics will have on the university business, and consequently its estate’s needs, has to be strategically factored into how estates evolve to be affordable, flexible and resilient enough for the future. The response to this prospect from an estates perspective is to become much more forward-looking and to plan more strategically, creating adaptable and flexible space provision that can rise and fall to align with an institution’s position. 

The report suggests that this demands more collaborative, non-siloed environments where the estate knows the corporate planning outlook, and corporate planning understands the complexities and timescales involved in the estate being able to meet the need. Governors will no doubt be keen to ensure that they kept in the loop, so they are able to play an active role in any such developments.