Student accommodation: A vision for the future

 

The student accommodation sector has experienced a tumultuous few years in many respects, having felt the full force of disruption from the Covid-19 pandemic, with increasing scrutiny and challenge from students. With campuses having returned to a more stable normality, the sector is now grappling with the impact of the cost of living crisis.

These times of uncertainty raise the question of what the future holds for student accommodation and whether the sector needs to change to meet current and future challenges.

Meeting increased demand

Demand for student accommodation remains on the rise, with particular growth expected in the overseas student market. Many institutions and private PBSA providers alike are looking to expand and improve their existing stock. With financial challenges an ever-present, institutions may need to consider a wider range of funding options for capital development and refurbishment projects. These may include forward-funded income-strip and Design Build Fund and Operate (DBFO) models.

Birth of a flexible, hotel-style offering

A greater shift to blended and part-time learning means that a significant proportion of students no longer need, or wish, to reside in student accommodation on a full-time basis. The cost of living crisis has further intensified the need for institutions and private providers to create an offering capable of meeting a diverse range of student needs.

In recent years we have also seen the growing power of the student as a consumer. The emergence of “review culture” and websites like StudentCrowd, mean that institutions and private PBSA providers are under more pressure than ever to drive up the variety, quality and value added benefits of their accommodation offering in an increasingly competitive market.

Progressive institutions and providers are working on a variety of accommodation options, including, in addition to the conventional full-time “boarding school” model, a flexible AirBnB or hotel-style offering. Such offerings are radically different to what has been a long-established tradition for the sector, and will require careful financial modelling and legal frameworks.

Partnering between institutions and the private sector

Student accommodation continues to be an attractive asset class for private and institutional investors, particularly in uncertain economic times.

Increased financial and funding pressures on institutions and the desire to outsource management risk means that many institutions are drawn to partner with investors and/or private PBSA providers. Changes in the approach to local planning policy mean that, in some areas, private developers will need a nominations agreement in place with an institution in order to get planning permission to develop new accommodation.

This symbiotic relationship means increasing opportunities for investors, institutions and private providers to collaborate, create and deliver a new approach to student accommodation; one better suited to meet the diverse needs of a diverse student population.