Homes for Students Projects Significant Revenue Growth
25th Apr 2019
Penthouses for postgrads. Four-posters for freshers. College cribs kitted with cinemas and concierge services. More and more universities are developing luxury student accommodation - but the question is, are they really investing in infrastructure, or simply ideals?
According to The Guardian, institutions without a Â‘Russell Group badge' often struggle to secure investment from the City, and so have to self-fund their enterprises, and of course the ensuites to go with it. For example, Roehampton University is funding its 600-bed development (which includes a Georgian garden and woodland views) with an £80m 25 year loan from Lloyds; whilst Salford University is currently spending £81 million on new halls which will include a top-of-the-range gym and games rooms.
This may seem like a straightforward supply and demand situation, but the expectations surrounding it are actually much more circular. In an ever competitive marketplace, universities need infrastructure improvements in order to attract new students (especially as students increasingly expect all first-year accommodation to be guaranteed); but they also need sufficient student numbers and a strong reputation in order to fund any new developments in the first place.
However, there are several other factors which might reassure the universities currently drawing up blueprints and floorplans. Firstly, despite the increase in higher education fees, a record number of students are going to university (496'000 in 2013, with a 4% increase in the number of applications); which perhaps justifies the ambition behind accommodation proposals. Secondly, 18% of these students are international, and given that they could be paying up to £35,000 in tuition fees, it is fair to assume that many of these students will be willing to pay more for accommodation. Thirdly, many halls of residence can be designed to accommodate conference guests during the holidays too, so that universities can charge rent all year round.
It is still far from a safe bet - there is still a huge financial and occupational risk, which is why investors such as UPP (a company that designs, builds and manages student accommodation) have to implement such strict selectivity criteria. And if you fall out of their guidelines, you have to make your bed (a double with Egyptian cotton sheets) and lie in it.
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