Universities are not only providing more student residences, they are using them to attract the more discerning undergraduate. Lisa Pilkington reports
Imagine a student’s Utopia: no getting out of bed to attend lectures; no spending hours in the library; and no living in dilapidated digs. Imagine studying for a degree from the comfort of your own armchair – in your own brand-new apartment.
This dream is already becoming reality in the student accommodation sector, where affordable, hi-tech apartments are coming on stream.
The catalyst for this development is the predicted rise in student numbers. Despite falling university subsidies, a 5-7% increase in the tertiary student population is expected over the next five years.
Much of the student residencies stock that was built in the 1960s is in need of refurbishment – and universities are frequently outsourcing expansion and modernisation costs to the private sector.
Universities are realising that the provision of good-quality accommodation can be a key factor in attracting students as they become a more discerning group, shaking off the Young Ones’ stereotype.
New schemes can provide anything from 50 to more than 1,000 bed-spaces in flats, usually arranged in clusters. These typically comprise six or so individual en suite living spaces, with shared kitchen and lounge areas.
Internet access
With connectivity an increasing priority, most schemes provide sockets in each room for Internet access as standard. As Philip Hillman of King Sturge says: “You have to include hi-tech cabling in new schemes. People expect it now.”
Security is also a priority. Most flats have individual security access – usually a swipe card – and 24-hour CCTV is often installed.
Developers planning new schemes are generally targeting university towns with student populations of more than 20,000. Development is taking place on and off campus, with students preferring the latter. This can free-up space on congested campus sites and has helped breathe new life into many city centres.
GVA Grimley’s Paul Watson comments: “All the major conurbations are ripe for development, but it depends on the strength of each local letting market.”
In Liverpool, work has just started on Moorfield Group’s £13.7m Atlantic Point student village.
The 15,000m2 (161,460 sq ft), 1,000-bed development, on Leeds Street, is one of the largest planned in the UK, and comprises 10 four-storey blocks, to be arranged in clusters.
Each room has Internet access and cable facilities. Moorfield Group’s Edward Cade says: “We’ve looked at whether we can link into the university’s local area network (LAN) so students can hook-up to this. Although it’s prevalent in the US, it’ll take a while for universities to open their networks here.”
It was the lack of supply in Liverpool that lured Moorfield to the city. Cade explains: “We identified the site and approached John Moores University. It projected a 3,000-bed shortfall in first-year student accommodation and we were attracted by this demand.”
Office-to-residential conversion
Refurbishment of existing secondary and tertiary office space is also in demand. In Bristol, conversions have taken place in Corn Street, Baldwin Street and Welsh Back – helping to boost the area’s A3 sector.
However, GVA Grimley’s Watson believes that new-build schemes are the way forward. He explains: “Clusters are the most popular schemes and the most economical to develop. With office conversions, there’s too much of a compromise – they can be more expensive and more of a headache.”
DTZ Debenham Thorpe’s Derek Nesbitt explains that investors can expect to choose between new-build with sale and leaseback to the university; existing halls purchased from the university with leaseback; existing new build purchased from developers and then direct let; and new-build schemes with direct letting.
Maximising returns
FPDSavills’ Simon Scott has identified two emerging approaches to student investment. “The housing association, covenant-led option on institutional terms is becoming less common,” he says. “Investors are now prepared to take on the management headache and let directly to students – thus maximising returns.”
Kay Sutton of FPDSavills’ private finance division says: “On this sort of investment banks are prepared to lend, but it depends on the strength of covenant. A deposit of20-25% of the total value of the scheme is required.”
Sutton believes that, given the larger volume of units now associated with student accommodation, lenders prefer to see professional management companies operating schemes.
“It’s not absolute – but nine out of 10 companies insist on it,” she says.
Rotch Properties and Schroders have formed a new company, The Investors Group, to invest in PFI projects – including student accommodation.
Others interested in the student market include Scottish Life, Pelham Partners, Jarvis University Partnerships and The Unite Group.
Long-term partnerships with the private sector look set to be the most beneficial solution for universities as they tackle difficult accommodation issues. These partnerships also have the benefit of transferring risk.
One way of reducing risks is to maximise accommodation letting each year.
Universities charge between £35 and £80 per week for a room, according to location. Out of term time, colleges can let student rooms to backpackers or for conferences, summer schools or as budget hotels.
FPDSavills’ Scott says: “Some schemes are let 52 weeks in the year, which means no voids. However, this is a rarity, not the norm.”
The long-term future of these schemes remains to be seen. While student accommodation will be around for years to come, developers are looking at other uses for schemes, including social housing or private letting.
Moorfield Group is looking to broaden its horizons by providing budget accommodation, not just for students, but for workers such as trainee doctors and nurses.
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A student’s perspective “As a student at the University of East Anglia, I’ve lived in both halls of residence on campus and a terraced house on the outskirts of Norwich,” writes Joanne Aitchison. “Living on campus was easy. It was a good way to make friends, and lectures were a short walk away. While living off-campus I enjoyed the comfort of my own house. “To me, the idea of a new flat does not go hand-in-hand with student living but, obviously, I would not turn down the opportunity. “Refurbished offices could be really popular if they were able to provide what students want. Our considerations include rent, size of room and location. “But I would never substitute lectures for self-teaching on the Internet because university life is composed of many aspects – some of which would be lost. “We like our luxuries – telephone points are standard, cable television is becoming widespread and Internet access is an attraction. “But traditional digs are still the old favourite.” |
