With some declaring that the student accommodation market in the UK has already hit maturity, a recent Bisnow panel discussion looked at the future of student housing.
Is there still room for growth in the sector?
The panel considered that there is still a strong supply-demand imbalance, especially in London, Manchester and Cambridge. Even in periods of downturn in the property sector more generally, there is still a large demand to study at UK universities. The number of high quality universities in London makes this a particular focus for Greystar, such as with their London Bridge project (which has recently received planning approval). Jane Donachy of University of the Arts London also noted that there is a trend of many more second and third years looking to live in university accommodation, and there is currently insufficient capacity for them in halls. This is reflected in Knight Frank’s analysis of the pipeline for 2019/2020, which indicates a 25% increase in student housing developments since last year.
The panellists did however flag that the UK student housing market is mature compared with elsewhere in Europe, with Jeannie Wong of Brookfield highlighting Germany and Poland as recent areas of compelling growth and Troy Tomasik of Greystar looking to Spain and the Netherlands. Italy and Portugal have also been noted as investment opportunities in the press.
Income streams during the summer can also be a factor when selecting locations for new investment and developments, such as the Edinburgh Fringe Festival attracting Brookfield to this city.
Interestingly, Jane Donachy noted that there is a strategic shift towards universities owning and managing more accommodation themselves, instead of going through independent funders, developers and operators. This is particularly prevalent in London, where different universities and colleges are starting to come together to invest in combined projects. She was also of the opinion that nomination agreements are outdated.
As the UK student housing market becomes more saturated, the growing negotiating power of universities and end users may cause a shift in the approach of legal documentation. We may, for instance, see more partnerships between universities and private PBSA developers and an increased emphasis on leasebacks to universities as operators.
What are the latest trends for design?
Cushman & Wakefield have noted that 23% of all students are from outside the UK in recent analysis.With the continuing large influx of international students, Jane Donachy emphasised the different approaches towards university studies by home and international students and the different spaces needed for each. For example, international students prefer rooms with en-suites and these work best when renting out rooms for conferences during the holidays, but home students do not mind sharing facilities and lower accommodation costs are more of a concern.
From a design perspective, Rachael Samuel of Kohn Pedersen Fox noted that it is architecturally difficult to provide different rooms with different facilities at different price points within the same development, so creative design is key. It is important that developments do not merely focus on the premium end of the market for international students. Planning policy reflects this, with affordable accommodation being a standard requirement.
The panel noted that mature and international students have a greater requirement for quiet study space, when compared with traditional home students who look for more of a social aspect when choosing halls. Although this suggests that having several community areas for a range of purposes maybe helpful, Troy Tomasik considered that large community spaces are central to the success of student accommodation developments and are more efficient operationally. Jane Donachy was keen to emphasise the benefits of mixing different students, using a recent development in Acton for students from both University of the Arts London and Imperial College London as an example of where this worked well. Having a diverse range of student mixing develops a thriving student community.
Following the introduction of the WELL Certificationin the UK, Rachael Samuel noted that wellness is a popular trend and increasingly important for students, even though the standards are lower than for residential properties. Brookfield sees wellness and staff supporting the wellbeing of students as a distinguishing factor of their student accommodation brands, and the panel focused on pastoral care being crucial. In recent articles, iQ Student Accommodation has highlighted lifestyle, student experience and an increased focus on wellbeing as brand differentiators in this market. The panel noted however that wellness, pastoral care and student safety tends to be more of a focus for parents (rather than students) when selecting accommodation, so Jane Donachy’s marketing to parents and students differs accordingly.
The panel discussed co-living. Troy Tomasik saw planning as a limitation in the UK, although Greystar is looking at potential co-living projects elsewhere, such as in San Francisco and Vienna. Jeannie Wong considered that developments including student accommodation alongside spaces for technology start-ups and flats for young professionals works well in practice.
CA Ventures have recently noted that build and site costs are squeezing margins, especially at the affordable end of the student housing market. However, the panel were divided in respect of modular construction, with Jeannie Wong seeing this as a solution for rising costs but Jane Donachy noting that this can result in unimaginative and unappealing design. Rachael Samuel and Troy Tomasik emphasised that offsite building of smaller repetitive parts was the way forward and that modular methods of building did not mean that design would also be modular and repetitive. Especially in London, installation of large modular units is in any case much more difficult, with crowded and small streets hindering delivery from offsite factories.
Despite political uncertainty, the UK’s world class higher education system is well placed to continue to grow.