Investor interest in student accommodation has yet to show signs of a slowdown, with investment volumes for Q1 2017 up £0.7bn on the same period last year, according to the recent Quarterly Student Housing Index from JLL.
There are several reasons for this, among them the enduring strength of higher education in the UK and the fact the sector offers strong, defensive characteristics with attractive and clearly visible returns.
A few years ago, purpose-built student accommodation (PBSA) was considered an alternative asset class; a ‘play’ on the resi sector.
However, having had considerable capital invested in it, PBSA has become its own asset class. It has risen on the agenda, not only as a class in its own right, but through its association with the evolving higher education sector.
This economically important industry has always been high on the political agenda, but the Higher Education and Research Bill recently passed by parliament marks a new chapter in the development of our universities and the market for higher education.
The bill has included the introduction of the Teaching Excellence Framework, a series of measures to focus on the needs of the student in the provision of higher education teaching. These include a ratings system of bronze, silver and gold that determines whether students are being challenged to reach their full potential.
Greater level of competition
The bill attracted a certain level of controversy before it was passed, in part because it directly links these new student-experience-led measures of quality to universities’ fee-charging ability, something that is crucial to students who are, above all, seeking value from their time and the money invested in university.
The Teaching Excellence Framework will signal a greater level of competition for the best students among higher education providers.
It must not be forgotten by PBSA providers, then, that a crucial part of the student experience is where a student chooses to call home during his or her university time.
Customer service should be a priority for any PBSA operator
While investors have piled into the sector, some building significant portfolios, they have been less active when it comes to development and therefore are less tuned in to designing a product and delivering a service that really meets the requirements of today’s students, who are subject to increasing academic, social and personal pressures.
Students have a range of accommodation options open to them, but as certain restrictions are put in place, such as increasing the difficulty of converting a family home into a student house, PBSA that is affordable will be in more demand than ever.
As universities become more rigorously assessed for the value and quality of their student experience, student accommodation providers should be looking at themselves in the same manner.
That’s why ensuring we have a model that allows efficiencies of scale, affordable rents and the development of high-quality properties, as well as services that will attract customers, has been so important to Unite.
Customer service should be a priority for any PBSA operator - a university’s success, after all, is also ours - with value-added service propositions focused on delivering what students really want.