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UK private sector accommodation heats up

Students in the UK are increasingly living in private sector halls of residence. Numbers rose by around 10,000 in 2018/19 – to a total of almost 160,700 – up 7% from 2017/18 figures. It’s a result of student demand, enrolment increases and educators wanting to focus on education – and private accommodation providers anticipate further growth, they say.

Unilodgers' growth has been driven in part by the "increasing attractiveness of the UK compared to other destinations", the company has said. Photo: Unilodgers

Student Roost has multi-lingual speakers to help integrate international and domestic students

Annual HESA statistics showed that the latest total of students in private sector halls of residence marked a 36% increase from 2014/15 numbers.

“Amenities and communal spaces are key things students consider when choosing university accommodation”

Investors seem to be taking note – a report has suggested transaction values in student housing could exceed £7.5 billion over the next 12 months.

While figures include both domestic and international students, providers have indicated they are buoyed by an increase in international student numbers in the UK, with students opting for better amenities and comfort over traditional university accommodation.

Founder and director of student accommodation search engine, Dan Roberts, explains that the purpose-built student accommodation demand surge is due to changing priorities for students.

“In the past few years, we have seen a surge in demand for PBSA – particularly when it comes to international students studying in the UK,” he notes.

“[Students] are now looking for more than just a place to sleep and instead want a home away from home, where they can accommodate their wider lifestyle with amenities that suit them,” Roberts tells The PIE News – adding that services include on-site eateries, gyms, dedicated study areas and cinemas.

“Providers are now creating unique and vibrant student communities, not just “student accommodation”,” he says.

Students hold those high-quality facilities in high regard, according to CEO of Student Roost Nathan Goddard.

Aiming to create a “united community” for all students, Student Roost hosts regular events to celebrate cultural days to give “international students an opportunity to share their traditions, but for them to learn and experience local celebrations too”.

“This is something we pride ourselves on and students appreciate experiencing different cultures and customers – which enriches their time at university,” he says.

“Amenities and communal spaces are key things students consider when choosing university accommodation so they can enjoy and make full use of where they live.

“PBSAs offer students everything they need under one roof… so their homes are spaces to live, work and socialise in,” Goddard says.

Photo: Student Roost

PBSAs offer much more flexibility, Goddard continues. “Student Roost pioneers a customer-centric approach which allows students to choose their contract length, room type, and tailor their payment plan.”

Additionally, international students are attracted to Student Roost’s offering due to the steps it has taken to make the moving in process as “smooth as possible”, he adds.

International students are not required to have a UK-based guarantor and by working with international agents, the booking process for Student Roost properties is simplified, he notes.

“We cater to international students by allowing them to move in earlier or extend their tenancy as required. There is also a flexible cancellation policy for students whose studies are dependent on successful visa applications.”

Additionally, Student Roost has multi-lingual speakers to “help integrate international and domestic students”.

“International student flows show no signs of slowing, so we confidently predict an increase in the numbers of international students as our number of Roosts increase across the UK,” Goddard adds.

With non-EU international students representing 69% of its residents, GCP Student is also seeing increased demand from overseas students.

Gravis Capital Management Limited director, Nick Barker, has previously noted that the company is “well-positioned to benefit from the severe shortage of supply for private student accommodation coupled with increasing numbers of international students choosing to study in London”.

“One thing we’ve noticed is the growth in applicants from China and India has been propelled lately,” Barker notes.

“The two year post study visa news helps and puts the UK on an equal footing to other top English taught university destinations,” he says, adding that current US-China relations have also “made the UK more attractive” for international students.

CRM Students – with 25,000+ beds across 60+ UK sites – sees PBSA as a “more simple option and one which provides more safety and security, as well as more facilities than traditional off-street housing”.

The company says the increase in the “proportion of international students choosing PBSA has coincided with an increase in international students seeking a UK degree”.

This rise has also occurred at the same time as more PBSA stock is being delivered into the market, hence the dramatic 7% increase as seen in the recent HESA data, the company notes.

CRM is more demand from both domestic and international students, according to its CEO Stewart Moore.

“Over 50% of CRM’s students are from overseas and we see no end to this,” he tells The PIE.

“The UK’s universities continue to be amongst the best in the world, the experience of being a student in the UK is second-to-none and the recent changes to the immigration status of recent graduates mean that the UK will continue to attract students from beyond our own shores,” Moore adds.

“We remain positive that the number of internationals choosing to live with us will rise over the foreseeable”

He also states “PBSA in the UK is a well-established market and one which provides international students with a wide-range of price points, offered in a safe and secure environment”.

“Brexit and other global factors can still cause some ripples to the number of students entering the UK, but with PBSA being the accommodation of choice for this group, we remain positive that the number of internationals choosing to live with us will rise over the foreseeable future.”

Managing director of Britannia Student Services, Michele da Silva, says there is a “definite upward trend in international students, at the point of the first enquiry, requesting private halls of residence over the traditional homestay”.

Britannia provides halls of residence, homestays, shared apartments and houses. The increase is “borne out in the industry by a large number of new PBSA, which have been built in the last two-three years”, da Silva suggests.

“Developers are responding to student expectation and demand by constructing private halls that compete with each other on high standards, choice of room types and additional facilities offered,” she says.

The UK student housing market reached £5.2 billion in 2019 – the second-highest year on record after 2015 – according to the JLL UK Living Capital Markets Q4 Report.

Transactions in 2019 were however bolstered by two key deals – the £2.2bn Unite acquisition of Liberty Living and the potential IPO sale of iQ, with an expected price of in excess of £4 billion, the report reveals.

“Student housing is the big Living investment story of 2019, and with some significant new opportunities about to break into the market, we don’t expect a slowdown any time soon,” Simon Scott, lead director, UK Living Capital Markets, JLL says.

While da Silva notes that homestays are still a popular choice of accommodation, international students are also showing a marked preference for private halls.

“They are likely to be more centrally located and many offer a private bathroom (rare in homestays) and self-catering cooking facilities,” she said, adding students enjoy “the independence of living in a private hall”.

Demand for group accommodation for under 18s during summer months in private halls of residence is also increasing, she adds.

Lack of capacity means that universities tend “only to be able to provide housing for first-year students”, while private options are more flexible.

“We have always been in a position to offer a choice of year-round accommodation to international students – through our own inventory in private halls and our own residences such as Britannia South Bank in Southwark and a 134-bedroom student hotel, Britannia Study Hotel, in Brighton,” da Silva explains.

According to Chief Relationship Officer at Unilodgers, Vincenzo Raimo, it is clear more students are demanding better accommodation than the Houses of Multiple Occupancy sector has provided.

However, the proportion of students in private sector halls remains small compared with those in HMOs, he highlights.

“With the expected growth in the university sector over the coming decade more private halls are going to be needed to keep pace with demand,” he says.

“The uncertainty that universities face in terms of future income and the desire to increasingly focus on core academic services means that most don’t have access to the resources to build their own accommodation to meet growing demand.”

“More private halls are going to be needed to keep pace with demand”

Partnerships which PBSA and universities are developing are “vital if universities are to meet future demand in terms of both volume and quality”, Raimo adds.

Raimo says that the number of users of the Unilodgers site has “grown massively over the past few months” , with growth driven in part by the “increasing attractiveness of the UK compared to other destinations”.

“Last month users searching for private halls on Unilodgers web site increased by more than double over the same period last year with particularly large increases seen from India growing almost three times in January 2020 compared to January 2019,” Raimo adds.

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