Student Accommodation – where we are and where it’s going
Cushman & Wakefield’s Sarah Jones answers questions about the student housing market
Andrew TC Smith (partner and head of the public sector advisory team), Sarah Jones (partner in the public sector advisory team) and David Feeney (partner, student accommodation) at Cushman & Wakefield are the course directors for the second in the student housing series of educational briefings brought to you by the Henry Stewart Property Hub.
Q: There have been reports of some universities being over enthusiastic in future predictions of student numbers. Is this affecting the market?
A: The recruitment environment in higher education is the most volatile it has ever been, with recruitment uncapped and market forces being encouraged to drive competition. At the same time, the number of young people has dipped to its lowest level in decades. It is ever harder for universities to predict numbers, given these factors and that so many students are coming through UCAS Extra/Clearing, much later in the applications system. But it is not just a matter of growth in student numbers which affects the market, but how the quality of each institution affects demand from each geography – with some institutions relying very heavily on local student recruitment, and needing a disproportionately smaller quantity of student accommodation as a result. We try to make sure that student accommodation providers are aware of these complex factors in assessing opportunities.
Q: Build to rent, retirement homes and social housing are property assets of interest to investors. Student housing is also very popular. Have we hit the top of the market?
A: Each sector of the property market is characterised by its own level of maturity, and we see student accommodation as more mature than some of the other emerging asset classes such as BTR and retirement living. Within each sector, every city operates on a cycle – starting with the growth of users (such as students in the case of student accommodation), followed by waves of property development then market stabilisation before another growth period begins. We can see student accommodation entering the next level of maturity, with competitors relying ever more on gaining market share – with many now understanding the need for strong brand messaging and delivery on the promises of those brands in order to stay ahead. There are always opportunities for value creation based on greater levels of market share, and using innovation to stay ahead! Innovation can come in the form of new audiences, such as encouraging UK returning students away from HMOs, or in the levels of service or quality of residential life programmes to deliver a more immersive experience.
Q: Partnership working, especially in the provision of student accommodation, is important. It’s all wonderful – until it’s not. What are your top tips for avoiding problems?
A: Partnership working is one of the great skills of any business, not just those in student accommodation. Understanding the motivations of each party and articulating common goals between parties is important in determining how a partnership will work. Communication should exist on many levels between partners; from the contract through the respective management teams, to the operational strata of the businesses.
Having good working relationships across every level of partnership moves the relationship beyond the contract and allows problems to be resolved constructively between partners. What all parties should be aiming for is no surprises!
The Student Accommodation – Where We are and Where it’s going? course will be held on Monday, 23 September 2019 in London. The course directors will cover market demand, capital values, income levels, yields and trends using a number of key tools and case studies. For further details on the course content and how to book, click https://www.henrystewartconferences.com/property-hub/student-accommodation-where-we-are-and-where-its-going-ss-2019