The student accommodation market in the UK is growing consistently year on year and with this the competition continues to grow. Each year it is driven by new supply, changing demographics and the growth of international students coming to the UK to study. According to Savills, investing in student property has risen up to 17%, proving to be a wise decision for many landlords.
With that being said, there is a lot of question surrounding student accommodation in Liverpool and if the market is oversaturated with new developments, providing too much choice to students. While the student population has risen approximately 6% year on year, so have the number of student properties and these new developments seem to be replacing older developments leaving them empty for the new student term.
Purpose-built student accommodation (PBSA) and Houses of Multiple Occupation (HMO’s) are the two main forms of investment properties of student accommodation. The Universities and College Admissions Services (UCAS) claim that 84% of students are said to be happier living in PBSA’s in Liverpool specifically. The influences of this happiness are things such as location, quality of the accommodation, cost and facilities. Many PBSA’s take form in a cluster of flats (between 3-6 rooms with communal kitchen and living areas) or studios with the added bonus of extra facilities. In the case of Queensland Place, our own student accommodation, we have laundry facilities on site, a full gym, cinema room and games area.
According to Wakefield’s UK Student Accommodation report for 2017/2018, Liverpool has 17,080 purpose built student flats with at least an extra 1,844 beds that came on board in 2018/2019. International students tend to be the main market for purpose built accommodation due to the convenience of the properties and everything being packaged together and ready for when they arrive in a brand new city. According to UCAS, around 500,000 international students study in UK universities each year but conversely there has been a 2.4% drop in applications this year to UK universities.
Liverpool is a city with multiple well-regarded universities and therefore does attract a large number of students and as a result has amounted to highly saturated PBSA development in recent years. In fact, the United Kingdom has grown to a record breaking 627,115 PBSA bed spaces in 2018/19. Convenience and affordability are two top priorities in international students and according to UCAS international students are 94% more likely to rent compared to the 70% UK based students. Across the UK, there is approximately 250,000 international students per term, so focusing on affordability, bill inclusive rents and facilities in developments should be a high priority for investors in student property.
Private sector accommodation tends to be more expensive than those that are available directly through the universities which usually ensures that the accommodations attached to universities fill up first. Student expectations are continuously changing and with new developments, the competition is high to be the most stylish, competitively priced, and give the best overall student experience. Owners/operators who optimize their brands to their advantage, by having a sophisticated approach to customer service and care with their tenants, are those that seem to be flourishing in the market the most through this effort coupled with their high quality stock and locations. These operators are showcasing a lifestyle, rather than just a property.
Regardless of political uncertainty, the desire to attend university overall is expected to continue and grow in both local and international students which will result in the higher education demographic increasing in 2020/2021. Hopefully as a result of this we will see the PBSA sector benefit from this growth and a key differentiator for the out-performers, will be those who place an emphasis on the overall student experience coupled with realistic expectations of returns in the student market.
To conclude, the student market is ever changing and is mainly driven by overseas students, supply and demand. Liverpool is very much a lucrative city to invest in, particularly in the student market, dependent on the location, overall student experience and being competitively priced.