The state of purpose-built student accommodation amid COVID-19
The coronavirus has brought uncertainty to everyone, but research shows that the pandemic hasn’t entirely deferred the plans of new applicants to the UK expecting to start school in autumn. According to a survey conducted by UCAS, a UK-based organization whose main role is to operate the application process for British universities, 90% of undergraduate applicants will begin school come term times in September.
But changing student numbers have kept universities and the providers of purpose-built student accommodation (PBSA) on their toes as uncertainty still whirls around how the development of the pandemic will affect student decision-making.
Purpose-built student accommodation providers in the UK have taken various measures to alleviate the impact of the situation. By offering refunds and discounts to tenants, PBSA providers have tried to avoid a doomsday scenario where potential financial losses may reach £7bn, from international students alone.
Optimism lies ahead, though. UCAS survey numbers show that demand from domestic students will likely remain stable. On the international student front, there seems to be a 12% rise in applications by non-UK students, most coming from China (18%), India, and Hong Kong (5%). Last year, 76,000 international students applied to study in the country, while this year the number is 85,000. Surveys by the British Council and UCAS conducted independently on Chinese students show that only 16% of prospective students are likely to change their plans, while in March the number was 29%. The percentage of those canceled is 1%.
However, numbers shouldn’t be looked at with caution as uncertainty around the current situation may change things quickly. Unite Students, the largest owner, manager, and developer of purpose-built student accommodation in the UK has posted numbers that show a decrease in international student inquiries. Similarly, the British Council research predicts that there could be 12% less international student enrolments this year.
Student priorities can easily change because of COVID-19. So far we know that statistics show that demand for student housing will remain steady, but many students are delaying their decisions.
On a positive note, this bodes well for the purpose-built student accommodation sector as its service-focused model may be better suited to meet the needs of students in the current situation. A Knight Frank 2020 Student Accommodation Survey backs such expectations pinpointing that 75% of students that have lived in PBSA will recommend it to new students; this is up from 69% last year. Also, the survey shows that 25% of first-year students living in PBSA will continue doing so, and around 40% of second-year students agreed with them. In Leicester, 64% of students indicate that their private purpose-built student accommodation offers “Good” or “Excellent” value for money.
Surely, the next few months are going to be challenging and the final number of new student applications will be affected by the fact that many students are still putting off their decisions because of COVID-19.
But the future for PBSA landlords looks promising as the number of 18-year-olds in the UK is rising, and in the next ten years, this could add around 135,000 home students.