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BTR – international students, co-living highs and n…

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Data shows that the number of visas issued to Chinese nationals had dropped by 58.7% in the 12-month period up to September 2020, creating significant challenges for PBSA providers as they scrambled to fill as many beds as possible.

While the most recent numbers for 2020-21 show a partial recovery with those issued to Chinese students increasing by 177.5% for the nine-month period ending June 2021, they are still down by 2.7% compared to the equivalent period in 2018-19.

StuRents found the impact has varied per location and regionally; cities such as Bristol and Nottingham have been buoyant this year due to strong demand growth, while there have been obstacles in cities such as Coventry and London due to their particularly high exposure to international students.

Despite this, Covid has shown the reliance that PBSA places on international students to maintain healthy occupancy levels. With the cost of PBSA significantly more than the average maintenance loan provided to students in England, PBSA rents must be slashed to make it a financially viable alternative to houses in multiple occupation (HMOs).

With a declining Chinese youth population and the rising quality and quantity of good quality Chinese institutions, StuRents forecasts competition between the major English speaking study destinations and operators of PBSA is likely to intensify.

UK HMO market remains bullish

Whilst year-on-year growth in enquiries for accommodation was less impressive than for PBSA, the sector was not as severely impacted as it was for PBSA, with demand for HMOs remaining strong throughout the pandemic.

The desire from domestic students to live away from the parental home remains strong, with the majority of house-hunting activity occurring between October and January. This demand has been strongest at Russell Group universities and those institutions deemed to be prestigious with 35.0% more yearly acceptances at higher tariff providers in 2021 compared to 2013.

In comparison, medium tariff providers reported growth of 9.8%, whilst lower tariff providers saw a reduction of 12.6% over the same period.

Richard Ward, head of research at StuRents, comments: “Overall, both the PBSA and HMO sectors have weathered the storm of the past 18 months with the sector outperforming other asset classes such as retail.”

“However, while the HMO market has been largely insulated from the pandemic due to its early lettings cycle and strong domestic demand, UK PBSA has faced a number of hurdles due to travel restrictions and the uncertain conditions facing students due to Covid-19.”

“More importantly, the pandemic has exposed the PBSA sector’s reliance on international students, which was felt acutely at the peak of the outbreak. While the appetite for higher tariff institutions remains for now, competition is becoming fiercer, and investors will need to be aware that only the very best locations containing renowned institutions are likely to outperform.”

He concludes: “Crucially, the suitability of an investment should not be based on broad market analysis or institutional reputation alone. The most discerning investors are realising the importance of evaluating the granular, local conditions to ensure an appropriate product fit, rather than relying on national trends.”

Data shows London’s co-living market is operating at full capacity

New statistics from Built Asset Management (BAM) shows that September occupancy rates were at 100% for the month for the first time since pre-pandemic levels.

The co-living operator links the strong occupancy rates to a steady influx of young professionals returning to the city throughout the quarter of July-September, which saw the final easing of lockdown restrictions, as well as a slowing down of those moving away from the capital.

According to BAM’s data, the effect of the pandemic was marked on occupancy rates, with levels dipping to their lowest at 88% during February 2021, where England had been placed in full lockdown.

September’s 99.9% occupancy rate was BAM’s highest level since pre-pandemic, operating at this exact level in January 2020.

The easing of lockdown restrictions in July 2021 has had a positive impact on occupancy rates within the co-living space in the capital according to BAM’s statistics, with month-on-month levels being as follows:

  • July 2021 – 95%

  • August 2021- 97.5%

  • September 2021- 99.9%

Co-founder and director of BAM Alex Gibbs says: “This steady increase towards full occupancy in recent months, following the easing of Covid-19 restrictions, is a hugely positive sign for London’s co-living market.”

“Like so many industries, the co-living sector undoubtedly went through some gruelling periods during the toughest stages of the pandemic, so this confirmation that the fundamentals of the market remain strong, now that it is no longer being artificially suppressed, will be welcome news for landlords, investors and operators alike.”

He adds: “It has been pleasing to witness a  ‘return to the capital’ as lockdown measures have eased and offices have re-opened their doors (albeit in a more flexible fashion in many instances). An eighteen-month period with very little new co-living stock being brought to the market (in combination with a reduction in existing stock as many providers were, sadly, unable to keep their doors open) has created the right environment for a sharp rebalance of supply and demand in the post-pandemic rental market.”

For landlords and operators, Gibbs says: “One of the keys to maintaining high occupancy moving forward will be creating co-living accommodation which works equally well for professionals with hybrid working models (whereby their home may also be their office) and professionals who will be spending the vast majority of their time in the office.”

Brand-new BTR housing development launches in Wolverhampton

Build-to-rent (BTR) specialist Wise Living has officially launched its new £9.3 million development in Wolverhampton.

Reservations are now being taken on 64 new properties at the development on Cambridge Street. Home to the former Springfield Brewery yard, the scheme has completely rejuvenated the site, which has lay vacant for the last 25-years.

Wise Living has partnered with housebuilder Keon Homes for the project, working in conjunction with Birmingham-based architects BM3 to ensure that the build complements the local heritage of the area and reflects its historical significance.

The 33 one and two-bedroom apartments and 31 two-bedroom homes will welcome their first tenants from November, meaning that residents will be in their new homes in time for Christmas.

Properties available include The Starley, a modern two-bedroom apartment from £670 pcm and The Hobbs, an ‘impressive’ two-bedroom home with study from £790 pcm.

Anne Malone, head of customer experience at Wise Living, comments: “More than £10 billion has been invested into the BTR market in the last five years, with Birmingham and the surrounding areas highlighted as one of the major growth areas for the next decade.”

“We’re delighted to be launching our third development in the West Midlands and our second in partnership with Keon Homes, after working together on the hugely popular Herbert House scheme in Coventry.”

According to Malone, there’s increasing demand for high-quality rental properties in Wolverhampton for couples and families, and the development has already received significant interest.

“We’ve worked hard with our partners to transform a former derelict space on Cambridge Street into something we’re all hugely proud of,” she continues. “A crucial part of the project has been about working with our partners to create design features, aesthetics and landscaping that complement the surroundings but are also sympathetic to the area’s heritage.”

“We look forward to welcoming our first residents over the next few months.”

Wise Living has developments across the country, including in Telford, Coventry, Rotherham, Birkenhead, Boston, Mansfield and Hull.

https://www.propertyinvestortoday.co.uk/breaking-news/2021/10/btr–international-students-co-living-highs-and-new-wolves-scheme