MIPIM: investors & operators discuss where student housing is headed

March 21, 2023


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Over a delightful breakfast on Tuesday, we sat down with notable figures in the student housing sphere and delved into the current evolution of the sector. Between the pastries and morning refreshments, a very interesting conversation was held on the various current trends characterizing PBSA in the market today.

The state of university-operator collaborations why can’t we be friends?

As people got settled in, the casual exchange turned to the topic of student mobility and cooperation with the side of higher education. Once again, it was agreed upon that the sector was still lacking in this regard as there remains apprehension between universities and private operators in different parts of Europe. However, as members of the table saw it, this might be changing with both stakeholders opening up to the idea. It was also an opportunity to bring to light initiatives that could help build further potential for close collaboration — such as the Student Living Monitor. This research initiative by The Class was cited in the conversation because it seeks to investigate how different aspects of student housing offerings affect student wellbeing - which is an important factor for universities as well. After all, the positive mental state of students is integral to their academic endeavours. 

Preparing student housing for the long haul: 

The discussion shifted to the sustainability of student housing as an asset, which entailed concerns about maintaining affordability for students amidst inflation and the effects of political manoeuvres. Rent controls were inevitably brought up as one disincentive in the market, but we agreed that this meant more creativity was needed in order to keep the longevity of PBSA assets. This means not only fostering diversity in portfolios but in a variety of other aspects as well. 

Given the heterogeneity of students occupying these buildings, operators have to become increasingly aware of how to differentiate them and their needs. What is the capacity that some students are willing to pay? What are some of their different preferences? What are some value-add services that students are willing to accommodate their budget for? 

PBSA as hospitality assets?

This tangent led to one of the overarching ideas that were discussed at length during the morning meeting; the gradual repositioning of student accommodations to become more hospitality-like. For most of the asset class’ history, it was primarily seen as a residential investment and was treated as such. It was, for the most part, perceived as a place for students to have a bed and basic living amenities. Now, residences such as The Social Hub are changing that as it now becomes a place for people to socialize, find opportunities, and serve people for all kinds of reasons. Of course, most PBSA assets remain as they were — mainly residential stays— but there is a growing sentiment in the industry that is changing them to be a mix of residential and hospitality. How this will affect underwriting and investor perceptions has yet to be significantly observed, but it certainly is an exciting development.

All-in-all, we’d say it was a very productive and lively breakfast!

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