Why is the UK a strong market for PBSA?
Whilst the pandemic resulted in a short-term phase of virtual learning, in 2023, the world has now largely returned to face-to-face teaching. And the UK is no exception. It’s no surprise then, that higher education in the UK is experiencing phenomenal growth. PwC reports that the UK is the second most popular country in the world with international students. But there’s another reason why students flock from far and wide to attend UK universities; the UK student housing market offers exceptional living experiences. Of course, students want to thrive in their studies, but they are also seeking brand new friendships whilst getting involved in everything their university has to offer. The rise of purpose-built student accommodation (PBSA) coincidences with the demand for community-oriented student experiences. With international students being 60% more likely to live in PBSA than British students, this housing model is best positioned to capture the international student market as the world continues to open up.
State of the market
The UK student housing market has grown exponentially in recent years. Despite the challenges that the sector has faced, and the prediction that growth would occur at a much slower rate, last year the market grew by a staggering 7.5% with 717,000 beds in PBSA buildings accounted for in December 2022. This is a 20% increase over the last 3 years where, in 2019, market growth was at 3.9%. PwC reports that now over half of UK stock is managed by private companies, and has massively increased by 39% in the last decade. Meanwhile, with “robust demand and undersupply continuing to fuel market growth”, the UK PBSA sector still has a current shortage of 450,000 beds. It’s fair to say that the market is strong, but what does PBSA uniquely offer that makes it one of the best housing options for students coming to study in the UK?
PBSA is more flexible than traditional student housing models with leases for a semester, academic year, or longer. With the growing availability of proptech tools, like easy-to-use booking platforms and global search engines, the process of finding a suitable student home is as simple as booking a hotel. But there’s more to the PBSA offer than meets the eye.
Well-being for the win
In the PBSA sector, resident well-being is highly prioritised. At a roundtable discussion on student living, led by The Class Foundation in September 2022, the conversation dominated around the knock-on effect that the pandemic has on resident mental health. After the UK announced its first lockdown three years ago, many students abruptly left to go home, thinking they would be able to make a return to the UK just as quickly. Of course, the lockdown period lasted much longer than most expected. This resulted in a period of reduced occupancies in the PBSA sector. But some students were left behind.
In 2020, a survey conducted with UK students found that 50% of participants felt lonely and excluded from their university community. 59% of participants lived in student accommodation. Loneliness can increase the risk of other more serious health conditions, including colds, heart attacks, stroke, cancer, and depression. Lockdown was hugely challenging. Whilst operators did their best to forge social contacts between existing residents, by organising virtual bake-off competitions and regular online check-ins within the community, providers were often restricted by the tough measures that the UK had placed on social contact.
Fortunately, the availability of technology solutions enabled providers to bring their communities together. Virtual communication channels and forums allowed residents to connect with each other and support one another. Additional software helped residents report issues to property managers and reach out to community managers for general support, and have safe and secure access to their spaces, whilst video tour technology opened the sector up to a wider and more global audience of students in preparation for their return to the UK.
In the PBSA industry, technology keeps getting better and better as service providers understand the need for tools that keep people together when they’re physically apart. Additionally, as the UK has now lifted all restrictions, it means that students can meet friends and attend lectures in person as they used to. Meanwhile, the onus on well-being in PBSA continues, particularly in terms of encouraging social contact and building community.
Community is the key
A study by Apartment Life found “that a happy, connected community are more likely to stay [in their home], even if rent goes up”. This factor is mainly attributed to making friends. Residents with seven or more friends in their building are 47% more likely to renew their lease. And why wouldn’t you? Friendship is all about human connection.
PBSA providers recognise the power of community. That’s why the role of a Community Manager is hugely important in this sector. This is someone who creates amazing resident experiences and is in a crucial position in business operations. Providing the bread and butter of a fantastic student housing experience, the Community Manager is an individual who goes above and beyond to support and welcome everyone into a community that’s built on values of inclusivity and sharing. A Community Manager introduces new residents to one another, organises events (and is present to forge those connections), and makes sure everyone feels included.
Matt Smith, CEO of Allsop, a provider of student housing, wrote in an article published by LOFT last year says that: “By supporting people and providing them with tools while enabling and encouraging them to be at their best, we create an environment and culture that means everyone can thrive which in turn means delivery on objectives for clients, staff, supply chain and residents.”
The UK student housing pipeline reflects a demand for studio apartments and is geared towards studio units at about 41%. If community living is so intrinsic to the student experience, then why do the majority of PBSA residents choose to live in studio apartments? There appears to be a challenge for providers that recognise the value of community and social connection in student housing, whilst balancing with the wants and needs of residents. The solution could be a hybrid of private and shared space.
“A person is so far formed by his surroundings, that [their] state of harmony depends entirely on [their] harmony with [their] surroundings”. — Christopher Alexander.
A sense of shared space
Community can be built virtually, or even through shared experience, but a powerful way to build a community is to provide shared spaces. PwC reports that “operators [providers] that offer a community will fare better, especially those with social spaces”. That’s because having shared spaces encourage people to meet one another and build friendships. PBSA is a hybrid offering that blends multiple activities into one space; working, sleeping, eating, and playing (or studying…) under one roof.
Many PBSA buildings have incredible shared amenities. When my team attended The Class UK event in September, they toured two great examples of PBSA — Chapter in Spitalfields and Yugo in Whitechapel. A huge 34-floor building, Chapter provides stunning views over London. It has a great coworking space, well-fitted gym, cinema room, and bar. Meanwhile, Yugo in Whitechapel provides shared kitchens for students to cook up a delicious meal with their friends, large lounge spaces, and a gym.
Shared space can be anything from casual spaces for chatting and hanging out, to study rooms, gym, cinema rooms, and more. These are spaces intended for students to take themselves to when they need a break from their private space. In a recent article for Property Investor Today, Neil Smith, Managing Director UK and Ireland at Scape, expresses that shared spaces in PBSA help residents to “feel part of a vibrant global community”. Again, the role of Community Manager here is hugely important. In these shared spaces, they host events and facilitate that connections that residents make between one another, making sure that they don’t leave a social occasion without speaking to someone. That’s how connections and friendships are formed.
The future of student housing
The UK is currently on the brink of a recession, so you might expect the student housing market to fall. In fact, the current economic circumstances make the UK a more affordable place to move to for international students, which is resulting in its growth over the course of this year. The student population in the UK sees no signs of slowing down. The PBSA sector is now not only a solution viewed by residents for a semester or academic year, but it also provides fantastic amenities, an experience that’s curated around the community and a flexible offering enabling students the opportunity to stay there much longer. Students want to find a place to call home. And what better place to find a home than the fantastic offering that’s provided by the PBSA sector?
