In these unprecedented times, where the outbreak of Covid-19 showed us a number of new realities and decimated others, some industries came out stronger than before.
Purpose-built student accommodation (PBSA) is one such sector which has witnessed tremendous recognition from investors from all around the world, throughout the pandemic. With investment volumes doing fairly well than other established real estate asset classes and the pandemic assumed to be providing impetus for additional growth, new emerging players’ alongside the existing one’s appetite to increase investment shows no signs of slowing.
Despite the recent dip in PBSA planning applications, several underlying fundamentals have only taken this sector from strength to strength and will continue to do so. And not just this, they have also reflected the stability of the sector against all odds.
When it comes to PBSA, the mobility of international student has created many opportunities. Even during the time of the pandemic, there was a huge increase in the number of non-EU international students. The UCAS numbers revealed that international students increased by 20% compared with last year.
The UK has also introduced a new post-study work visa system, where international students can remain in the country for 2-years after graduating. With most of the international students often possessing higher accommodation budgets than their domestic counterparts, this principal demand base has presented itself as a key interest factor for investors when identifying areas where demand outdoes supply.
Although the student experience has taken a blow this time, with students having to rapidly adapt to being taught and socialising almost virtually, demand has continued to increase. A recent survey by Unite Students and Opinium showed that despite this year’s challenges, students, on the whole, preferred to stay at a student accommodation as opposed to staying back at home and 93% would continue to do so (if allowed) from January.
In addition to this, 81% of students surveyed opted to go to university despite the circumstances that impacted their experience.
Both of these shows a larger demographic trend of positive sentiment towards continuing university education against the backdrop of the pandemic – one that has attracted much attention from investors.
Quality – A Priority
The positive response offered by the PBSA providers during the time of pandemic cannot be understated as well. With Covid-19 changing the priorities of students, combined with high service quality and flexibility, PBSA type accommodations are fast emerging to offer clear advantages over other accommodation models.
This is particularly relevant when looking at the amount of time spent by most students in their accommodation last year as a result of nationwide restrictions/lockdown where satisfaction with accommodation became even more pressing.
By quickly adjusting to student requirements throughout an intensely difficult period, they have proved themselves ahead from other accommodation choices available to students.
A continuation of this uptrend is quite likely with more evidence revealing an increasing proportion of students will look up to PBSA to continue to meet their housing requirements as a result of higher choices and increased expectations.
While the UK find itself in a third lockdown, the outlook for 2021 is still set to be positive. There are a number of new student schemes in the pipeline on the supply-side, all of which have a focus to make mental health services and high quality of communal services as essential features of all PBSA. This has been intensified off the back of students emphasising the importance of wellness and support offered by PBSA providers.
The pandemic has also highlighted that the PBSA providers must refocus their product and services to appeal to domestic students. The domestic student market has proven to be remarkably adaptable and undeterred by coronavirus when pursuing their education, which has and will continue to lead to soaring occupancy levels if proactively targeted.
In light of this, PBSA providers will play an active role in addressing affordability to place themselves at the centre of this demand.
As per the trend, it can be assumed that by 2030 there will be more than 400,000 domestic students in higher education. PBSA providers acknowledge that this is the right direction the sector must head towards to ensure they don’t miss out on the upcoming opportunity.
An Era for Improved PBSA
As it stands, the traditional processes of booking accommodation used by PBSA providers is quite onerous and lacked innovation, until recently. Providers often don’t have the required tools to convert students into bookings at scale and also don’t have access to the much important data that shows student preferences on a granular level.
Since they have to rely on slow, disorganised and inefficient tracking of occupancies and contract management, they are yet to meet their full potential. In addition to this, student accessibility, particularly for overseas students, has largely been restrained as a result of expensive and time-consuming processes.
The PBSA now being a global scale market operating in full force and attracting significant institutional capital, the need to integrate with end-to-end platforms to optimise overall offerings will be important.
In 2021, the PBSA providers who distinguish themselves will be those who leave faulty legacy processes behind them and adopt fast, reliable, and secure streamlined processes to offer instant and flexible bookings to students.