Blog | Student Housing

Time to put the Purpose-Built Student Accommodation myth to bed

There is a growing consensus that the UK has too much purpose-built student accommodation (PBSA). Widespread stories of empty bedspaces, juxtaposed with the sight of new blocks of student accommodation under construction, explains why so many share this perception.

The numbers however, suggest otherwise. With 602,000 PBSA bedspaces for 1.7 million full-time students in the UK, demand is actually outstripping supply. This is because while total higher education numbers have stayed relatively constant (2.28m since 2007), full-time student numbers continue to increase, with more students living away from home than ever before. Consequently, the student accommodation market remains one of the best performing asset classes in the UK. That being said, the sector still faces a number of challenges.

Empty rooms

To understand the current environment, it is worth looking back to 2011 when students of Lincoln University were living in Portacabins (and they were not alone!), with a whole student village made up of temporary accommodation. Developers were rubbing their hands at such disarray – because as far as students were concerned, it was almost a case of ‘any bed will do’. With customers so readily pleased, it was a developers’ market. Seven years later and the boot is on the other foot.

The truth of the matter is that a number of developments in university towns and cities are experiencing pressure on rents. Some are even suffering from empty beds and void rates that providers have never experienced before. However, drawing any conclusions from anecdotal evidence such as this is premature. Stories about the oversupply of the sector are not a reflection of the macro market by any means – nor even the micro markets! The voids we have witnessed most recently are a consequence of a lack of reinvestment or inability to recognise that students are privy to the level of service on offer.

While studios account for 47% of all new build student accommodation, they also make up the largest percentage of empty beds. Students are now consciously seeking better value for money and as a result, they are beginning to reject some of the older, more dated studios which still demand the highest rents.

Tuition fees

People often ask, what impact have tuition fees had on student numbers? At the moment the answer is none, and this doesn’t seem likely to change radically in the near future. When talking to sixth form and college students, you still get the feeling that they believe higher education is the best way to get on in life.

However, whilst student numbers remain unscathed, student accommodation has not. Students are increasingly conscious that their experience provides maximum value for money, and so while the decision to go to university still feels like an obvious one, the increased cost has sharpened students’ focus on two matters: quality of degree/institution, and accommodation choice.

While this is beginning to put pressure on lower-ranked universities, providing bedspaces for these institutions remains necessary.

Location is king

Actually, it isn’t. Bizarrely, there is no evidence to suggest there is any direct correlation between location and occupancy levels.

Instead, what students seek is a trustworthy accommodation provider, who offers a level of service and an environment which feels like value for money. Occupancy issues seem to be more prevalent in older, non-descript buildings. In fact, trendy, well considered, service-led student schemes in good locations are out-performing prime but complacent PBSA.

Social media

You don’t need to search for very long to find groups and forums associated with student accommodation. Every student accommodation block has them and they will be the first port of call for the vast majority of students seeking new accommodation, instead of any formal webpages set up by the vendor’s managing agent.

The importance of social media cannot be underestimated. Like most other service industries, a string of poor reviews will inevitably hit occupancy.

How much PBSA is required?

With 30,000 new bedspaces coming out of the ground every 12 months, and 8,000 beds going out of service, there is a net 22,000 additional bedspaces this academic year alone. While the relative plateauing of overall higher education student numbers (2.28m since 2007) suggests an oversupply issue, the makeup of these 2.28m students has changed considerably. Since 2007, the number of full-time students has risen 11.3% (HESA, 2017), meaning an additional 26,448 full-time students every year, the vast majority of whom require accommodation. So, a net of 22,000 new PBSA beds isn’t enough.

In summary

So, is there too much PBSA? No. However, developers have to recognise that students are increasingly driven by value for money. The growth of full-time students is expected to continue and therefore we should expect delivery of PBSA to continue at the same pace.

Student accommodation is like any other business; you have to reinvest and modernise in line with customer expectation. Failure to reinvest in a business invariably equates to little or no growth, and maybe even decline. In this fast-moving sector, where, a few years ago, demand was comfortably in favour of the developer, it is now students who are calling the shots.

Notes to editor

If you would like to get in touch with Anthony, please contact him:

anthony.hart@allsop.co.uk or +44 (0)113 236 6677


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