The number of academics at UK universities is at an all-time high, with over 2. 8 million enrolled in 2022, of which around 20% are international. And the more academics there are, the more the demand for housing increases: a call for proposals is expected to have a deficit of up to 620,000 places for students until 2026.
So what is this shortfall, and how can the Specially Designed Student Housing (PBSA) sector provide more beds and assistance to avert the growing student housing crisis?
Paddy Jackman: Now there are academics from Manchester who live in Liverpool, for example, and some even live in the countryside; there are about 250 Bristolites living in Newport, South Wales.
It all starts with how universities are funded. They have a steady source of income for their UK students, so the only way for the maximum of them to increase their turnover and be able to cover the emerging prices is to recruit overseas students. So we end up with an unforeseen number of students, and it’s very difficult to generate an offer that meets that kind of demand.
Neil Armstrong: There is a growing demand for domestic and international students. By 2030, there will be one million applicants a year at UK universities [according to the UCAS admissions service], compared to 760,000 today. A few doors away from the PBSA, many investors are fleeing the PRS [private rental sector] and HMOs due to legislative and tax changes. All of those points compete to cause scarcity.
Harriet Bantock: There’s a ripple effect of Covid if you look at the data. Between 2015 and 2020, more than 30,000 beds were delivered per year; But as of 2020, 50% of projects were two and a half years behind schedule. Only now are we seeing an accumulation of sources again. This educational year, 2024-25, we will have 18,000 beds and next year a record year in terms of delivery.
Georgie Drewery: Our clients tell us that emerging structural pricing and a shortage of hard work are also squeezing their margins and slowing down the structuring process.
PJ: At the moment, you can’t build [new PBSAs] for rents well below £205 per week; This is the case in the regions; it’s higher in London. This is impossible for most UK academics. There are still 500,000 students in HMOs, most of which have very different costs. Going back to the basics, this means that students decide where to study based on what they can and not what they would really like to do.
Sam Scott: I would argue with it a little bit. Although I am someone who deals with PBSA developments, my son is now in school and was selected to enter an HMO next year. Of course, I don’t sell the PBSA very well! But when I look at the employees, and the fact that he and four other people have to pay full rent if one of them chooses, and the expenses that have to add up, it’s not that far off [from PBSA Rents].
NA: In my opinion, the joint venture [JV] between Unite and Newcastle University announced in February will likely be a model for the future. [Ownership of the new £250 million, 2000-bed project in the city will be shared 51% between Unite and 49% to Newcastle University, with the university contributing its land under a 150-year lease. ]
Stephen Young: In general, investors are faced with a huge value of land in the monetary model. There is a mathematical temptation to position contracting in the most sensible decile and, due to the imbalance between source and demand, it is possible to do so; This may be feasible.
I visited a site and the most popular gadget is a TikTok room where students can simply record videos. I never imagined it would be the most popular but, of course, it’s a source of income for some students who get paid. to publish content.
But there are these huge campuses owned by universities, and the ability to create joint ventures with them, where universities may well set the ground adrift and manage a profit-sharing style for 20 or 30 years. That’s the source of income for the university and source of income for the investor, and it’s gained value that also allows it to build something more affordable for the client.
GD: I think PBSA is considered even more of a luxury, and if I pay a high rent, I expect the amenities to be there. I visited a place where the amenities were incredible; They even had a climbing wall, but the most popular service was a TikTok room where students could simply record videos. I never imagined it would be the most popular but, of course, it is a source of income for some students. who get paid to post content.
PJ: There isn’t a survey among academics that even has a gym as one of their five most sensible teams.
I’d love to think that the industry could just work in combination to create something that’s lightweight and more capable. But it would take a lot of work to tell academics that it’s better for them to opt for energy-efficient materials. Equipped accommodation and being able to enjoy all that university life has to offer, rather than working part-time 30 hours a week for a higher salary class option.
HB: Colleges may already have large, affordable gyms that students can use. So, having a few small ones [in a PBSA block] is probably rarely very mandatory in those cases.
NA: We’re seeing more and more people recognize that PBSA offers something much better [than HMOs]. It started when the tariffs came in 2012-2013 and then after Covid. In our 2021 UCAS Student Housing Survey, PBSA providers got here about the most sensible landlords about HMOs in terms of student experience. [Of the PBSA students surveyed, 69% felt positive about their accommodation provider’s response to Covid, compared to only 25% across the PRS. ]
SY: It’s a macro question; This is happening all over Europe. In a way, the UK is lucky, as the source is among those of any European market.
At Kajima, we are attracted to new markets with very low delivery rates, such as Poland, where there are 95 students for a personal bed. [Kajima is a co-owner of Student Depot, Poland’s largest provider of student accommodation. ]
We need to install more beds in Poland and enter new markets such as Italy, where we would like to be present. But there are a limited number of local partners that can move up in terms of creation, progression, and management.
SS: The main charge that is taken into account in the control of student housing is that of people. We’ve all seen the headlines about inflation and wage growth, and we’re seeing a lot of turnover in this sector; So when it comes to hiring, we’re faced with just as many demanding situations as everyone else. And then there are utility and maintenance expenses: contractors’ expenses have also increased because they are affected by the same problems as we are.
GD: What we hear from our clients is that generational integration is a significant challenge when it comes to student portfolios, especially since there is a very high turnover [with a maximum of academics moving each educational year].
The factor most taken into account in the control of student housing is that of people.
It can be tricky to scale when repairs, accounting, and invoicing, for example, are done with other formulas. Aligning the tech stack so that you have a single formula that can do it all allows for much greater operational power and a smoother experience. for students.
Michela Hancock: Technology wants to make people’s lives less difficult and easier to understand. Sometimes I think we look at the generation because it’s shiny and new, but is it really appealing to citizens and the operations team?Is it so hard that no one knows how to use it?
MH: At Greystar, we train our groups and constantly for what is intense work. Our on-site groups manage our business model well, provide monetary reports to investors, and at the same time ensure the well-being of students.
But unlike in the U. S. [where there are degree courses in asset management], in the U. K. there isn’t a single funnel of team members who have passed four years of thorough study and can go straight into being a for-hire associate.
PJ: We have to recognize that the ability to satisfy the desires of a majority population between the ages of 18 and 21 is a very expressive set of skills. At Unipol, we need to do something about it: locate a partner university [that offers degrees in asset management] so that other people can see that they have a career design ahead of them and that we can get some stability in the market in terms of recruitment and retention.
NA: The debate rarely revolves around student housing; It’s the investment of the total sector, which is a little broken.
MH: Planning needs to be more flexible and blended tenure needs to be encouraged. I think there’s been a shift in a lot of [local planning] groups to focus more on residential systems than student systems. But there’s no one-size-fits-all solution – you want to plan for all asset classes.
PJ: Last October, our “Ten Cities” report revealed that the average student on a loan only had 50p per week left in their pocket after paying rent. So I’d like to see a more realistic verbal exchange about investing and what kind of residential reports we can offer.