The UK’s Purpose Built Student Accommodation (PBSA) sector continues to evolve rapidly, as we see domestic student numbers returning to normal post pandemic and maturing demand. Operators in the market are witnessing change in what students desire from their accommodation, with an increase in concern about the quality of safety, security and lifestyle. But with demand rising, not only in terms of student requirements, but a continued increase in investor appetite, how can PBSA operators ensure they evolve appropriately to meet the needs of the current student market.
Yardi’s regional director, Justin Harley, spoke with Brian Welsh, Managing Director at Round Hill Capital, Antonio Marin-Bataller, Investment Executive at Patrizia and other industry experts at the recent ALT/RESI conference, on how the PBSA product should evolve. As industry experts, they were able to provide great ideas for operators in the PBSA sector.
Listen to market needs
Since entering the sector, Welsh has witnessed PBSA develop from a brand-new asset class to the sought-after market that it is today. It was interesting to hear his opening thoughts on how Round Hill Capital are evolving to market needs.
“We’ve seen a big change it what defines student status. For many, the university experience is no longer about going out, partying all the time and getting drunk. We see students now valuing their health and wellbeing, with more time spent in gyms, etc,” said Welsh. “We believe that listening to the customer and their needs is vital in the evolvement of PBSA developments”.
With this being said, staying aware of the current market needs and providing the appropriate amenities in your PBSA developments, results not only in a greater chance of growth, but retention too.
Both Welsh and Marin-Bataller expanded on the discussion by stressing that “providing flexibility and simplicity is key”. Today’s student expects fast applications, quick turnarounds and a stress-free experience with their student accommodation. With this, comes the use of technology to facilitate a seamless experience for students in PBSA developments, from the initial booking process to roommate matching, booking a viewing, signing a contract, payments and guarantors, arranging the move in date and once living in the development, booking or accessing services.
The use of technology also alleviates the pressures of lengthy, admin tasks and instead allows PBSA operators to spend time on the things that matter – like students and business scalability.
And with larger scale opportunities comes more demand from investors, making technology a prosperous consideration for PBSA providers evolving their operations.
Location is key
Location has never been more important, for both PBSA operators attracting the right target market and investors seeking continued growth. Marin-Bataller justified this by stating, “as investors, we’re looking for people with more operational experience who look to settle their developments in established cities, in good locations”.
According to a recent report by Savills, the locations currently most attractive for PBSA developments include Bath, Birmingham, Brighton, Edinburgh, London, Manchester, Oxford and St Andrews. However, this isn’t to say that other UK locations are not suitable for development, if placed closed to university facilities and offer great access to amenities. Regardless, location marks itself as a key consideration in the development of the PBSA sector.
Collaboration with universities
Despite the student market being in high demand, remaining student centric is a priority for all operators, to continue to provide students with the accommodation they desire.
Alice Raine, Senior Associate at Clifford Chance, raised an interesting question – “will we see university halls and PBSA combine or stay apart?”.
“Collaboration between universities and the private sector will certainly increase. We’re already seeing universities in Sheffield and Northumberland outsourcing student housing,” said Welsh.
“Working hand in hand with universities is evidently becoming a big consideration for the industry, but the argument still remains as to whether universities want to prioritise spending money on housing or educational facilities” added Welsh.
As an industry expert, Welsh’s perspective indicates that PBSA operators should remain open to the idea of working with universities if they wish to evolve successfully in the market.
Address ESG concerns
Environmental, social and governance (ESG) factors in PBSA developments is becoming noticeably more important to students but remains an undeciding factor when selecting their accommodation.
Investors however are now considering ESG certifications as part of their analysis in identifying growth opportunities.
“ESG is very much in the pipeline and something we hope soon will be legislated in the PBSA sector, as it’s becoming more important to investors,” said Marin-Bataller.
With environmental awareness at the forefront of societal concerns, ESG is not to be avoided by PBSA operators in the interest of investors.
Thinking beyond the student lifecycle
It is a common assumption that PBSA developments exist merely for the lifecycle of a student, given the high turnover that houses in multiple occupation (HMOs) and halls of residence experience. But Yardi’s solutions consultant, Megi Clara, stepped in to contend this by asking, “are PBSA looking to retain students once they have fallen out of that category?”.
A huge consideration in the market stands to not only retain existing students but also to open developments to the wider residential market.
“We feel PBSA can offer amenities for all and makes for a chance to diversity the Build to Rent (BTR) market as a whole,” said Welsh.
Though less common currently, there are cases out there of senior residents living in PBSA developments according to Brian, showing proof that this is a realistic consideration for the sector.
A single connected solution to bring it altogether
The demand for PBSA developments is on the rise and operators have a lot to consider as the sector continues to evolve. But by looking at market needs, technology, location, university collaboration, ESG legislation and more, there is lots to learn in how they can evolve and scale accordingly.
Rounding all considerations together is Yardi’s end-to-end PBSA portfolio management platform, designed to optimise student housing services with a single connected solution. It is a powerful marketing and leasing platform that automates processes and streamlines activities, for an improved student experience. Our solutions are not only designed to digitalise operations but empower management teams to free up valuable time to focus on nurturing students and enhancing development scalability.