Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

Student Accommodation - Weathering the Storm

Sarah Jones • 21/04/2020

Universities closed their physical doors in mid-March and made a rapid transition to virtual teaching. Most universities have enabled students to leave accommodation contracts for the summer term, and summer business has been cancelled. A number of private accommodation operators followed suit by allowing students to request a refund of summer term rent. 

Many students remain in residences, including international students unable to leave, careleavers and those affected by the virus, and work continues to ensure the safety and welfare of residents. Cushman & Wakefield data suggests that the cost to the main private sector providers offering contract releases is almost equal in size to universities, accounting for a proportion of revenue for the summer term, and resulting in short term pressure on university and investor cashflows.

Looking forward, COVID-19 makes planning difficult for the forthcoming academic year. Universities face uncertainties around recruitment, with caps on UK student intake proposed by Universities UK to restrict aggressive competition, as universities seek to backfill the partial loss of up to £7bn in international students’ fee income.

Some UK students may choose to sit exams in the autumn, thus delaying their entry into university until January or the following year. Private accommodation providers who support universities (short-term/soft nominations) may find less certainty of agreements, and direct-let providers are planning for all eventualities as the situation is changing daily.

The lack of certainty over the 2020/21 academic year and impact on student intake has caused some investors to be more cautious. This, combined with general uncertainty in the wider real estate sector and turbulence in the debt markets, has significantly reduced transaction volumes. Equally, challenges for developers and contractors in completing schemes in time for September, given current labour and supply constrictions, may cause a number of schemes to be delayed or mothballed for the 2020/21 academic year. This will have an impact on investors’ cashflows, however, given the relatively low levels of debt compared to 2008, investors in most cases should be well placed to weather any short-term dislocation.

One speck of light for providers is the alternative use of student accommodation. Many residences are located close to teaching hospitals and universities are typically one of the largest organisations in any city. Conversations are taking place with the NHS and councils to house key workers, the sick and the vulnerable, subject to inevitable logistical challenges. Whilst this might represent a modest source of alternative revenue for investors, it is also a means whereby all providers are able to meaningfully assist with the current crisis.

Post COVID-19, there are reasons for optimism. The UK 18 year-old population is growing again and participation in higher education continues to rise. During a period of economic regression, even more may turn to higher education. Virtual teaching for first year undergraduates is being ruled out by some universities, in favour of students being fully immersed in the university experience. Non-UK students value the quality of our higher education and demand pre-COVID-19 was at an all-time high. We expect an increase in demand from students (both overseas and domestic) and investors once there is some degree of certainty.

 

rELATED articles

elderly gentleman's hand place over each other on walking stick
Insights • Residential

Should You Invest in the Retirement Living Sector?

As a needs-based product, senior living real estate has historically proven to be more recession-resilient and stable than traditional real estate sectors.
Amy King • 14/12/2020
red steel building
Insights • Commentary

UK Real Estate Perspectives

We are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 04/11/2020
modern office with lamps and Vitra style chairs
Insights • Workplace

The Challenges of Returning to Work

The return to work is considered across 3-time horizons and across 5 key areas from integrated facilities management, work space, people and future work patterns, to buildings and portfolio.
Nicola Gillen • 21/04/2020
high rise apartment block looking up
Insights • Investment

COVID-19 and Alternatives

Investors in specialist sectors such as student accommodation, life sciences, retirement living, data centres, healthcare, co-working, hotels and residential are seeking to understand the impact of COVID-19 on the underlying operational businesses as quickly as possible.

David Haynes • 21/04/2020
University laboratory US petridish
Insights • Lab

Life Sciences Looking Forward

Life science: from academia, to businesses and clinicians, the sector has never been more at the forefront of society.
21/04/2020
empty lecture theatre
Insights • Education

Student Accommodation

The lack of certainty over the 2020/21 academic year and impact on student intake has caused some investors to be more cautious. 
Sarah Jones • 21/04/2020
blue duotone graphic of people in office
Insights • Economy

EMEA Markets View

Our EMEA local market research colleagues share the latest real estate market views from their countries.
Andrew Phipps • 13/01/2022
high rise apartment block looking up
Insights • Investment

COVID-19 and Alternatives

Investors in specialist sectors such as student accommodation, life sciences, retirement living, data centres, healthcare, co-working, hotels and residential are seeking to understand the impact of COVID-19 on the underlying operational businesses as quickly as possible.

David Haynes • 21/04/2020
black & white young woman eyes raised, smiling
Insights • Commentary

Motivational and Social Shifts

If your past 2 weeks has been anything like mine, then you’re likely to be getting to a place of COVID-19 fatigue.
Richard Pickering • 08/04/2020
empty hospital operating theatre
Insights • Healthcare

Healthcare Balance of Risk and Opportunity

Never has the healthcare industry been in the spotlight to such an extent and rarely has the interaction between the public and private sectors been so constructive and collaborative.
07/04/2020
New Perspectives (image)
Research • Topical Report

New Perspective: From Pandemic to Performance

As a global leader in the commercial real estate (CRE) industry, Cushman & Wakefield offers clients a new perspective on COVID-19’s impact on CRE and beyond, preparing them for what’s next.
Michael Boonshoft

MORE INSIGHT

card
Insights • Sustainability

Do you know the new Spanish regulation about ESG?

Electric cars, sustainable mobility, use of recyclable materials, optimization of resources, educational campaigns and other actions that will be mandatory and that will affect all owner-occupied real estate spaces in Spain.
30/11/2022
CEA
Article • Office

Steel Business Center Discover the history of the traditional enterprise managed by Cushman & Wakefield

Inaugurated in 1995 and acquired in 2017 by Barzel Properties, the Centro Empresarial do Aço – CEA has been managed by Cushman & Wakefield since 1998. The building recently underwent an important retrofit, and continues to promote constant improvements and innovations.

Stela Hirata • 25/11/2022
Main Street 2022
Insights • Retail

Main Streets Across the World

RETAIL REBOUND: HOW RETAIL REAL ESTATE FARED DURING THE GREAT PANDEMIC STRESS TEST

25/11/2022
Main-Streets-2022-web-card
Research • Retail

Main Streets Across the World

Retail Rebound: How Retail Real Estate Fared During the Great Pandemic Stress Test

22/11/2022
Main-Streets-2022-web-card
Research • Retail

Main Streets Across the World

Almost three years after the onset of the global pandemic, the retail industry has been through one the biggest stress tests imaginable, but best-in-class real estate has remained robust – and even emerged stronger in some markets.
Ewa Derlatka-Chilewicz • 22/11/2022
blue duotone graphic of people in office
Insights • Economy

EMEA Markets View

Our EMEA local market research colleagues share the latest real estate market views from their countries.
Andrew Phipps • 13/01/2022
Outlook 2023
Research • Office

APAC Office Outlook

Asia Pacific’s key office markets tell a story of resilience overall, with steady demand in some markets, surging supply in others – and some cities in India experiencing both surging demand and supply
Dr. Dominic Brown • 06/12/2021
red steel building
Insights • Commentary

UK Real Estate Perspectives

We are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 04/11/2020
New Perspectives (image)
Research • Topical Report

New Perspective: From Pandemic to Performance

As a global leader in the commercial real estate (CRE) industry, Cushman & Wakefield offers clients a new perspective on COVID-19’s impact on CRE and beyond, preparing them for what’s next.
Michael Boonshoft
Insights

$name

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Cookies.
MORE OPTIONS
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS