Tag Archives: Property Week

The Future of Student Housing; whats next for the sector?

I’m privileged to have been asked to speak at a major Student Housing conference in London today. The Property Week hosted event is in it’s 8th year and has sold out; we can expect to see well over 500 people there. I’ve spoken at other industry events on Student Living, but this is my first time here – and its widely regarded as the big one.

New Student Living project by WCECOne of WCEC’s current projects; currently in Planning.

It’s been another incredibly strong year for UK Student Living. It’s anticipated that the year will close with over £5.7bn of investment recorded; that’s bigger than ever before. However almost all of that is transactional activity of existing operational assets, not new development supply. There is still strong interest from investors and developers in building new product, but there are some challenges to overcome.

Most major university cities have strong supply already. There will always be opportunity for growth and diversification, but its not simple to do, despite what some might think. Location, location, location remains a major factor for Student Living; it is housing after all. Beyond that the image below outlines some of the issues which are affecting the viability of building new Student Living at the moment.PowerPoint PresentationThe basis of the problem is that the required capital investment is outweighing income potential, especially for the lower-mid level “affordable” offer.  This is arguably where the greatest volume of demand exists. It’s become much harder to make the numbers work. But some, who know what they are doing and create an angle, can make it stack up.

Premium/ Studio led projects work, with weekly rentals of £250+, but only a small proportion of students can afford £10k a year to live in an ultra cool pad. They also have their tuition fees and living expenses which could easily add another £15k to that.

In my talk and panel session, we’ll be exploring how developers can create a competitive edge through design led schemes. This is recognised as a key differentiator now, but its easy to make mistakes and follow established trends which wont create a distinct angle. I’ve seen some great projects delivered this year, in the UK regions, in London and also in Europe. Quality is consistently high on the agenda, but its so easy to overspend on delivering it – and in areas which are unnecessary I think.

Despite public perceptions, students are discerning customers, with needs and demands which reflect hotel quality living, as apposed to the traditional student digs – or a hostel type offer. They want to be engaged in a community environment which blends living, relaxing, socialising and studying. These are the essential ingredients for Student Living. Some of this is physical, but some is about the brand and the operational function as well.

The  challenge we all face in delivering new student living buildings is to create something which delivers quality in all areas, but which is also commercially viable and realistic. To do this takes experience and skill; it will consist of a considered blend of design, space, specifications and also operational strength.

My talk concludes with four areas which, in my opinion,  define how design can give new student living buildings a competitive edge…PowerPoint PresentationYou can see a copy of my presentation in .PDF format by  clicking on the image below…PowerPoint PresentationYou can also read an insightful Property Week publication on the changing dynamics of the student living sector by clicking here.

 

Want to talk more about student living design?…

WCEC Architects are working on a range of really dynamic student living projects at present; for both private developers and universities alike. Some of these are new-build, others are refurbishments/ conversions. We are designing new concepts which explore compact living ideas, along with reinventing the traditional cluster apartment. We are also designing premium studio led projects with market leading providers. The fact our team have been involved in over 16,000 beds in the last ten years demonstrates to our clients that we know our stuff. We can create and add value. You can contact me by email by filling out the form below

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Rolling out the Red carpet in Student Living; the European perspective.

Last week I spent a few days at the ‘Class of 2020’ Conference in Amsterdam. This was a Student Housing and Higher Education event which included visits to a number of recently built student living developments around the city, with an insightful conference programme that discussed/ explored the growing Student Living market in Europe.

The Class Conference

Refreshingly this conference wasn’t financial/ data or advertising heavy. The content was very broad but students from all corners of the world, and their aspirations, demands and needs, were at the heart of the discussion.

The UK has for sometime been recognised as THE global leader in privately developed/ managed Student Living and it’s very much a mature asset class here. However other countries are following suit now and the forecast looks quite interesting across Europe.

2015 has been a record year for global investment into the UK student living asset class, but almost all of this has been high value transactions of built asset portfolios. The opportunities for new-build development in the UK are becoming challenging, not least because there is a high volume of existing supply in most key locations already.

By contrast Europe presents much more opportunity. The dynamics of the market in key cities around the EU have been constrained historically by regulation in terms of asset  use-class, taxation and rental caps. The ability to ‘make it work’ financially has been limited.

Higher Education is a continually growing and evolving global sector which is becoming much more connected in lots of ways now. With such a strong focus on the internationalisation of the HE sector, the EU is stepping up it’s game and rewriting the rules.

Cities with strong global brand status are always going to be popular/ desirable, but some currently have barriers to entry for Student Living development. For example Amsterdam is a great city, with good uni’s but, due to their regulations, the supply of PBSA (purpose built student accommodation) has been small.

European countries, cities and universities are now recognising the importance of international students and they really are rolling out the red carpet to attract them; this is proof that they understand the tangible and significant value of students, in financial economic terms, but also in terms of long term talent retention economically. With  all this comes a fundamental shortfall/ demand for quality purpose built student living.

We visited a number of recently completed projects last week. Its clear that they are learning from experience and are someway behind the UK. There were lots of interesting/ creative ideas, but in some instances the offer was very basic and serious questions about durability/ robustness were voiced.

For sometime I’ve been keen to see The Student Hotel. This high profile brand/ operator have developed a really strong offer which is based on creating a community. The environment is very design-led and includes some great ideas. I liked the TED Talks lounge best! Such a simple idea really, but a great way to engage residents and promote thought leadership/ ideas.

The Student Hotel TED Lounge

There are many areas I could talk about here in terms of the continual evolution of Student Living; environment, technology and communities being a huge area of development still, but I’ll blog about that one separately soon.

It was interesting to see a number of UK sector colleagues out at the conference; I’m sure we can all take something useful from what we’ve seen this week outside of the UK. You can see the Annual Trend Report launched at the conference by clicking here.

Early next month we’ll be attending the Property Week Student Housing conference in London. Hopefully the content will be as as engaging as the Class of 2020 conference…or maybe it will be the usual ‘sponsors pitches’…

Here’s a few more photos of The Student Hotel…

The Student HotelThe Student HotelThe Student Hotel

 

The next chapter. WCEC Architects

If you’ve been following my blog recently you’ll know by now that I’ve now left Lewis and Hickey. The last week has been emotional, but enjoyable, saying thank you and goodbye to lots of friends. I’ve had some really positive feedback from all sorts of people, both within and outside of the business, about my departure from L&H. Thank you sincerely for your kind sentiments and best wishes.

The future looks exciting for me. I’m certainly looking forward to getting started now at WCEC. I’ll be based in the Chesterfield office where around a hundred staff work from. That means they we are one of the largest practices in the East Midlands! Although, being honest, a lot of people don’t know of WCEC. This is something the business is already aware of. Part of my role will be to help develop the profile of the company to a wider audience/ client base. I believe I’ve already done this to some extent at L&H, so hopefully I can add value through my experience. I’ll also be working from the London office which is developing a strong client base and workload in the South East. My time in London has increased over the last couple of years due to clients being based there, so a physical presence there will be good for me and the company.

You can expect to hear lots about my work and the business on this little blog which has created a good following in the last two years.

First of all I will be heading over to MIPIM next week in Cannes! I’ve attended for the previous two years and according to Reed Midem I’m now a “Silver” delegate?! I’ll be flying the flag for WCEC – and no doubt catching up with a few known faces whilst out there too. My diary is already looking rather full, but don’t hesitate to get in touch with me if you’re going…

west hamstead square

Image above | West Hamstead Square, London.

Who are WCEC?…

Celebrating over 40 years as Commercial Architects, WCEC has developed a reputation for design and technical excellence which puts us at the forefront of commercial architecture in the UK.

The practice specialises in town centre urban regeneration schemes, and is currently working on multi-million pound schemes with some of the biggest developers in the industry to transform the fortunes of towns up and down the country.

Renowned for many years as the UK’s leading designers of out of town retail developments, we have diversified over the years and now deliver innovative and sustainable town centre schemes which not only encompass retail, but also leisure, residential, hotels, offices and business parks.

We pride ourselves in creating innovative design that meets client aspirations and is delivered both on time and to budget.  Our success is evidenced by our long term relationships with clients such as retail giants ASDA and Morrisons and year on year increases in turnover, profitability and workload.

The business is wholly owned and operated by three partners; Alex Wall, Ashley Turner and James Kemp.

What sectors are we active in?…

Mixed-use | Residential | Retail | Commercial | Leisure

What service offerings do we have?…

WCEC offer a complete range of in-house Architectural services which includes; design, master-planning, interior design, technical production and visualisations/ animations.

The business has already invested heavily in BIM in recent years and is using Revit extensively in a number of work sectors. There is still a lot of debate in the industry about BIM, but it really is moving fast now and a lot of companies are getting on board. We also offer separate BIM consultancy services to the wider construction sector and that is seeing some strong demand at present as other firms get to grips with the new generation.

Our sustainability services include; BREEAM accredited professionals, Code for Sustainable Homes assessors and membership of the Green Register of Construction Professionals. This enables us to combine our commercial background with specialist informed understanding to offer holistically sustainable design.

One development  I’m likely to be have some level of involvement in is Royal Wharf in the Docklands. It’s a project with Ballymore and is described as ‘A new waterside village for London’. This scheme, located adjacent to the Thames Barrier, was in Property Week last Friday.

Royal wharf_LRImage above | Royal Wharf, London.

So that’s a brief introduction to WCEC. As I said; you’ll hear more going forward. But please don’t hesitate to contact us should you wish to know more about our business…

www.wcec.co.uk

The financial value of Student Living

This week is the annual Property Week Student Accommodation conference in London. It’s attended by around 500 property professionals including; investors, developers, operators, universities, contractors and consultants. Some refer to it as the annual group hug where we reflect on how the sector/ asset class has performed in the last year and what might be in store for 2014. There is no doubt that 2012 was a tough year, I blogged about it – click here to see it. But this year is looking much stronger again in terms of occupancy levels, despite some major headlines with Opal Property Group going and others re-structuring their finances at present.

Bouygues_The Meadows_Essex University_┬®Hufton+Crow_028So what is all the fuss about with Student Living and why has it remained so resilient during the last five years, while most of the property/ construction sector has been slow? Well here’s some numbers which give some context to the scale of the sector today…

  • There are around 460,000 purpose built student living bedspaces now in the UK, in circa 860 buildings.
  • The number of full time students for 2011/12 was 1.72m and this has risen steadily over the preceding years, with an overall increase of 20% in the last ten years.
  • Universities own around 50% of the student living property market, with the balance being private operators. Just a few years ago, the ratios were much higher for Universities (70-80% of market share).
  • The average weekly rent for a bedroom in a purpose built student living development is now £110+, with London fetching over £180 (this equates to between £4500-£7500/ year minimum). There are high-end rentals in London of £500+/ week (£21k/ year).
  • The sector has seen over 1.6 billion of investment activity since September 2012, accounting for 30,000 beds.
  • Applications to study in the UK increased by 3.1% up to June 2013, the highest number since 2009.
  • Overseas student numbers are expected to increase by 15-20% by 2018 which will generate £3.9bn in tuition fees for Universities.

(Sources: Deloitte Student Housing 2013 and GVA Who owns student housing?)

So what does the ‘average’ student spend in a year? Here’s a basic overview;

  • Up to £9000 in tuition fees (UK students).
  • Around £5000 in accommodation costs.
  • Around £5000-6000 in living costs.
  • TOTAL = £20,000 (x3 years = £60k for a degree)

If you multiply this annual figure by 70% of the total 1.72m students (allowing for internationals and live at home students), you generate a figure of over £24bn. That starts to give some tangible scale to the ‘value’ of students.

P1030184For accommodation only, the annual figure is around £2.3bn based on the 460,000 bedspaces.

So where are the opportunities going forward? As you’d expect with property, its all about location. All of the UK Russell Group University Cities are well provided for, especially as these locations tend to have multiple institutes to serve, which provides investor confidence. Nottingham has one of the highest concentrations of privately owned beds (90%), although this figure will be skewed by the fact that UPP own most of the on-campus stock at both the University of Nottingham and Nottingham Trent University. Oxford and Cambridge only have 10% privately owned provision, but that is influenced by difficult Planning conditions and land values. Brighton and Norwich are among the strongest potentials for growth.

Knight Franks latest report, Student Housing 2014 can be seen here. This again reinforces the strength and continued investment potential in the sector.

To date, our practice have designed and delivered over 14,000 bedspaces for student living. This equates to around £500m of construction activity! See a small selection of our recent projects here. Or contact me to find out more | nick.riley@lewishickey.com

Big numbers when you start to add this up. That is why this asset class has become so important and is still attracting strong investment.