Last week, the 11th Annual LD Events Virtual Student Housing Conference took place and the sector gathered to discuss numerous topics which largely focused on recognising the impact of COVID-19 on the world of Student Accommodation including the importance of student wellbeing during these challenging times.
As we are all too aware, the Higher Education headlines are changing at such pace, even the most observant amongst us are struggling to keep up. As predicted at the conference, recent media captions depict dissatisfied students struggling with online teaching approaches, feeling isolated in their halls, and questioning their decision to attend university in 2020.
We have gathered some key points from the conference discussing them below as they may ring true in the future.
International Students
International students have always been an essential part of the student housing sector, with many universities becoming more financially reliant on them choosing to study at their institution. PBSA developers, particularly in London, have often focused building more higher-end luxury properties specifically to house this cohort believing them to have greater means to support a more affluent way of living.
Online booking/travel agencies have consistently reported a higher rate of PBSA bookings from international students compared to their domestic counterparts. However, a number of challenges, including VISA application complications, financial issues and physically being unable to get out of their country have arisen. As a result, the sector is eagerly anticipating whether these students will arrive and check into their accommodation (regardless of whether a booking was made).
There are investors and operators in the sector who argue they do not have an over reliance on international student revenue but we are likely to see how accurate that proves when the data is gathered later this year. Regardless, a diversified portfolio and ability to pivot to domestic or even non-student market if there is less international demand will come under the spotlight.
Student Demand for PBSA
Over 25 PBSA transactions took place worldwide between April and August 2020 and there is no strong evidence to suggest the student housing market will decline anytime soon. Over the next decade, a demographic change is on the UK horizon bringing with it the prospect of several tens of thousands more 18-year olds applying to university which the industry holds out as a panacea to longer term demand and supply concerns.
Responding to the student voice over the argument of continuing to pay rent during the early stages of the pandemic, several operators chose to follow in the footsteps of Unite Students and universities and issue refunds. Interestingly, Unite chose to categorise this decision as an investment in their brand. As Unite control and operate all of their own beds this was an easier decision for them compared to some of the operators who manage for several different investors who could not so easily follow suit. As a result, many have faced significant criticism from students when compared against the Unite response.
The response has highlighted to students and investors the maturity of operators and their improved focus and understanding of the needs and experience of students. Demonstrating that unlike HMO’s, PBSA’s are more flexible and have the ability to amend contracts if and when necessary.
Approaching this academic year, there is a sense that students expect a higher level of consideration from PBSA’s to amend contracts to fit in with their circumstances should they swiftly change. When opting to release students early from contracts, operators need to balance their own requirements with those which may negatively affect their residents (e.g. mental wellbeing and family financial hardships). We ponder whether bespoke contracts will become the ‘norm’ in future years as the market is potentially forced to adapt to housing students who may not necessarily require student accommodation when the majority of their learning will take place online?
In addition, PBSA appears to be favoured over university halls. StudentCrowd reported PBSA surpasses university halls when competing against the things students most value when selecting their accommodation. The data outlined a 5% decrease in students researching university halls in 2019/20 compared to a 27% increase for private accommodation searches in same year.
