Amenities in student housing: the new driver of yield
As the market becomes more sophisticated and competitive, StudentMarketing, a global market intelligence and strategic development consultancy focusing on student housing, in its ongoing observation of PBSA establishments in European cities, sees amenities driving student and parent preferences when choosing a student residence for the university years.
Ground-breaking PBSA Amenities Research
StudentMarketing has undertaken a comprehensive study of amenities on offer in continental European PBSAs. While the USA and UK are market leaders in this real estate investment segment, investigating the requirements of the European market is essential to gauge the development of student housing.
To provide a basis for this analysis – a true picture of what PBSAs are doing to make themselves stand out from the crowd – a study that involved both desktop as well as on-site research was undertaken over a 12-month period with the aim of collating the most detailed list of amenities in Europe. This resulted in an overview of 1,079 PBSAs operating on the continent (encompassing 15 cities across 10 countries).
Data never lies: what are the amenities on offer?
With a predicted additional 335,000 internationally mobile degree students in Europe by 2020, and continuing growth in the number of incoming students on short-term programmes such as Erasmus+ and U.S. study abroad, the need to know what these students want in their “home from home,” is critical to occupancy. Are investors and PBSA operators prepared for their needs, now, and in the future?
This study of amenities in the selected European cities offers insights into what students are looking for, what cities and countries are doing according to their own cultural norms, and what can be expected in terms of the breadth of amenities on offer.
The amenities provided by each of the 1,079 PBSAs were examined in detail; the data was then compiled by city, and subsequently an overall picture emerged as seen in the chart below (which includes a list of 13 selected amenities). These range from laundry rooms, communal kitchens, car parking and bike storage areas to gyms, bars/cafeterias/clubs, libraries and others.
An overview of cities and amenities
Data shows that most PBSA establishments offer utilities (the cost of electricity, heating, water and Wi-Fi) as an all-inclusive function of their prices (90% of all PBSAs), while 10% (mostly PBSAs in Copenhagen, Dublin, Barcelona, Valencia and Paris) still treat them as an additional extra.
The trend is towards providing an all-inclusive/encompassing rent for utilities as students use, and live by, electronic devices. Not only are laptops and tablets popular among students, but hair dryers, hair straighteners and electric toothbrushes are also commonplace, and it is often expected that provision for these will be reflected in both billing and housing design. Wi-Fi, once viewed as a luxury, is now a commodity, with many PBSAs providing high-speed connections to cater to increased usage, streaming and social media needs.
The provision of all-inclusive utilities also, importantly, helps parents who fund education and living expenses (especially of international students) deal with fixed costs rather than monthly variables – a vital component of their financial planning.
Just over half the screened PBSAs (51%) provide access control systems and identifiable security measures. While the data was not collated for all cities listed, it is still apparent that security and safety are now coming to the fore in Europe, with parents wanting their children to feel safe in the current precarious geopolitical era. There is clearly an opportunity for PBSAs to either upgrade or incorporate tangible security features in their developments to attract occupants through their parents.
Cleaning and linen/towel changes within PBSAs’ inclusive rent are offered at 41% and 31% respectively, on average (with a number of other PBSAs offering this at extra cost). Provision of this service responds to needs of Millennial students, who prefer to spend more time on lifestyle experiences than daily chores. Moreover, the cleaning service also benefits the longevity of the buildings itself, and its provision will inevitably increase as (boutique hotel/home) tastes transform needs.
Whereas 60% of PBSAs on average do offer communal kitchen facilities for students, the provision for meal plans is relatively low, with an average of 20% of PBSAs including this service in their fees. Spanish PBSAs in Valencia (61%), Madrid (53%) and Barcelona (36%) are leading the way – though in low numbers – followed by Italian cities. While, in general, PBSA specifics differ according to city, it is apparent that the level of meal plan provision by student residences is defined by national traditions. This finding shows the importance of understanding both country and city nuances when exploring different markets.
The most universal PBSA facility is a laundry room, provided by 77% of the 1,079 student residences. Interestingly, this figure is in fact lower for some Spanish cities (Barcelona 62%, Valencia 57% and Madrid 42%) as they offer washing facilities within the apartments, twins or clusters themselves. Thus, whether communal or individual, laundry facilities are essential, as gone are the days of washing your Levis at the local launderette at the end of the street.
Interestingly, quiet spaces such as a library are only offered by 19% of PBSAs studied. Students are clearly using their rooms, study rooms (offered by 40% of student residences) and other amenities provided for quiet study time. Moreover, the need for a library has become less important as services like Google Scholar and universities’ intranets already provide access to a multitude of electronic copies of texts relevant for study.
There is clearly a need, going forward, for TV rooms (51%) and bar/cafeteria/club amenities (currently included in 29% of all PBSAs studied) to cater to the more social aspects of student living and, while more social-oriented amenities are available (on average only 23% of the 1,079 PBSAs have what are called games rooms), their clear redefinition and design as more social spaces, for example social lounges or media rooms, may further attract the new generation of occupants.
Gardens, gyms and outdoor spaces are also coming to the fore in PBSA design. Currently, on average, 34% have garden space and 33% have gyms, while only 22% have terrace space and 14% an outdoor playground. Provision of such areas does not only contribute to the social aspect of living in a student residence, but also to the healthy lifestyle of the active generation of Millennial students.
Of all the student residences screened, 31% offer a car parking facility. This differs according to city, based on several factors, such as local regulations, the state of public transportation, the preference of students to opt for accommodation near the higher education institution in which they are enrolled, and the types of clients whom PBSA establishments serve (e.g. whether they accommodate tourists or young professionals in addition to students). A bike storage amenity is offered by 43% of PBSAs, serving as a cost-effective form of commuting in some cities.
4/ The indicators speak for themselves
While certain features of student residences are determined by national trends, it is important to understand the nuances of individual cities when exploring investment opportunities. Domestic mobile and international students, though having much in common, display distinct preferences in each study location.
The data compiled speaks volumes by laying the groundwork and providing a barometer upon which existing, and new, PBSAs can adapt differing strategies to market forces. These market forces, which are the preferences of students in the main, but also those of other occupants in quieter periods, are direct influencers of the amenities offered by PBSAs.
The figures resulting from the research may give student housing providers, universities and cities further insights into competition faced, student preferences, as well as local, regional and pan-European opportunities and best practices.
Note: The article was originally published by The Class of 2020 on 22nd November 2017 and is available here: https://theclassof2020.org/student-accommodation/kpis-what-students-want/