Student housing in Italy is undergoing significant transformations to meet the evolving needs of students. Last week in the bustling city of Milan, The Class Foundation held a student living forum to bring together professionals of the sector and address the issues at hand.
At this forum we tackled a wide range of topics, ranging from a thorough discussion on the impact of design and branding, a market update on the country from CBRE, a panel discussion that shed light on some of the things shaping the future of student accommodation in the country, and the release of our highly anticipated Student Living Monitor!
- The evolution and role of Branding in PBSA:
Joined with with Eri Cuanalo of Collegiate AC, James Brant of CRM students, and Marc Sampietro of Hines, the inspirational dialogue on design and branding in PBSA highlighted the pivotal role of branding in educating various stakeholders, including parents, universities, and the media, to dispel misunderstandings and negative perceptions often fueled by media coverage.
It emphasized the significance of having to implement branding both on a global B2B scale and at the local site level, allowing for flexibility in catering to different markets. The discussion underscored that the brand experience directly impacts the bottom line, emphasizing the importance of delivering a holistic student experience.
Because of the relatively new transformations PBSA is undergoing into becoming more of an experience value proposition, Marc Sampietro of Hines mentioned that most of the student accommodation sector draws insights and people from the hospitality sector, where trust-building through consistent experiences and maintaining staff to a hospitality standard were deemed crucial.
Additionally, the focus on community-driven experiences and values promotion was emphasized, along with the importance of genuinely implementing ESG and diversity considerations in branding and service offerings, rather than merely for appearance.
- Growing rental demand, high competition, and rental growth expectations despite investment slowdown:
In a data insight presentation led by Marco Di Terlizzi of CBRE, several key points about the student housing market in Italy and Europe were highlighted. The Italian market has seen significant activity, both domestically and internationally, and although it's generally in good shape, there have been protests due to a shortage of beds. Marco categorized the issues into PBSA occupier market and PBSA investment market.
Major Italian university cities are experiencing growth in the off-site student population, particularly among international students. However, PBSA supply remains tight in most cities, with Milan having the largest pipeline of 12,000 beds. Italy's provision rate of student housing is one of the lowest in Europe at 4%, presenting a significant investment opportunity for student accommodation providers. Rental demand has been fueled by rising interest rates affecting mortgages for home purchases.
Regarding the investment market, the cost of debt is increasing, leading to decreased loan-to-value ratios (LTVs) from banks, impacting developers. Construction costs remain high despite a recent slowdown, which may not fully represent reality. Prime yields are rising in all major European markets, including Italy, where attractive yields exist. The transaction volume in PBSA reached its highest point in 2023 over the past five years.
- Students need better support, quickly - the results of the Student Living Monitor:
During the latter half of the data insight session, the eagerly awaited presentation revealed the results of the Student Living Monitor survey, a pioneering dataset assessing the relationship between living conditions, well-being, and mental health. Using the internationally recognized MHI-5 measurement, which signifies good mental health at a score of 60 or higher, and poor mental health below 60, the average score among students was 57, indicating a general experience of poor mental health. Interestingly, Italy scored slightly higher with an average of 60.9, denoting better mental health.
Key policy recommendations emerged from the data, which showed that students with greater control over their living conditions reported higher mental health scores. Recommendations include expanding housing choices and empowering students in their accommodation decisions. Another major point from the data was that even students who used facilities sometimes had improved mental health, while those who didn't had lower well-being scores. Enhanced curation of facilities and programs, along with a better understanding of community engagement, are suggested. Moreover the data showed the mental health struggles of students from non-traditional backgrounds; students identifying as "Non-binary, other", and those with disabilities and long-term illnesses, reported lower well-being scores. This highlights the need for tailored support and community programs catering to diverse student needs.
Finally, those using mental health services needed more frequent access, yet over 50% felt they had no access to such services. Another interesting facet was that financial concerns were linked to decreased mental health scores. Recommendations include providing more scholarships for financially distressed groups and enhancing access to mental health services, especially for those facing financial hardship.
- Responding to media criticism and educating the public on PBSA:
In light of the recent backlash against private student accommodation in the media, Dario Bardini of CX pointed out the need for educating the market about Purpose-Built Student Accommodation (PBSA) and the hybrid concept. Particularly in Italy, where the concept is relatively new, northern European PBSA models have served as positive influences in shaping the market.
Elena Cattani also called out the need for public authorities to stand up and take more accountability for the housing crisis; citing the analogy that healthcare is the right of everyone and should be provided by the government, while private clinics provide additional options. The same is true for housing - it should be the right of everyone, and private student accommodation providers are granting more choices with a different experience beyond just a room. According to her, this should be the approach that media takes to covering the housing crisis.
- Transparency on student mobility and stakeholder collaboration:
The panel discussion also highlighted a need for more transparency between universities and student housing operators, especially with a greater introduction of short-term mobility programmes. Short-term stays in student housing were seen as a growing opportunity, but started discussions revolving around the need for better relationships with universities to support these short-term programs. Once exchange students are supposed to arrive, all the student accommodations are usually fully booked. It was also mentioned by Kelly-anne that the universities that have a growth strategy they didn’t have a housing growth strategy, and everything was centralized.
Addressing accommodation challenges for students who arrive in cities without secured housing was recognized as a pressing issue. From the audience, Eri Cuanalo mentioned Collegiate AC having done data-sharing agreements with universities. Dario Bardini suggested the development of platforms where private, public, and universities all collaborate for better planning were suggested as potential solutions.
- Balancing affordability and amenities:
Pierenrico highlighted the challenge of balancing additional services and amenities with affordability in student housing. While enriching the student living experience is vital, ensuring that it remains accessible to a broad range of students remains a key consideration for providers.Kelly-anne and Elena emphasized the value of common areas within PBSA as these shared spaces not only enhance the student experience but also serve as hubs for community building. Operators that have the intention to expand and optimize these areas reflects a commitment to empowering student experiences and fostering connections beyond the accommodation.
In conclusion, the event illuminated the multifaceted landscape of student housing in Italy and the future of the asset in general. It revealed the sector's commitment to creating inclusive communities, enhancing the student experience, and addressing affordability challenges while also recognizing the evolving needs and expectations of today's students. As Italy's student housing market continues to evolve, these insights will play a pivotal role in shaping its future.