Karen from Sale has recently asked us about the growing popularity of purpose-built student accommodation, or PBSA. In this video, Johnsy not only focuses on some of the highlights and benefits of choosing PBSA but also how it has changed and developed since most investors attended university.
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Please see below the full transcript of the video:
Hi, welcome to the latest Ask Johnsy and today we’re going to address a question from Karen from Sale, who’s asked about the growing popularity of purpose-built student accommodation, or PBSA as it’s known.
So, she’s pointed out that ‘everyone seems to be going on about this PBSA, but I don’t understand how it can be so popular when there’s lots of houses around our area, which would be Manchester, and they’re much cheaper than PBSA. So, why are people using purpose-built student apartments when they could go and live in a house, because when we were students, we generally wanted to live in a house after the first year’.
Karen, things have changed. The whole market’s changed and it’s a common mistake that a lot of investors revert back to their own experiences with student property when they’re looking at this market, and this is why so few investors understand student property and the opportunity that it has.
Purpose-built student property occupies a third of the market. Now, 10 years ago, it wasn’t a fraction of that and one of the reasons is what it provides to the students. Students have generally changed, there’s a lot more affluent students, more overseas students, and those students want more from their accommodation. Previously, you had to share bathrooms and kitchens and living space, now you’ve got fully self-contained studio apartments with their own shower-rooms, bathrooms, with their own kitchenettes with full facilities, with their own workstations, so now, students can pretty much go in isolation, which is quite handy in the current climate.
So, a few areas that people really choose, the reasons why they choose PBSA, one is because of the space, they don’t want to share facilities. The second one would be the actual standard of living that they get. In a recent study, we found that 26% of students who are in PBSA are more likely to achieve higher or top results than in halls of residence and 15% more likely than in halls of residence. So, that’s quite an important statistic.
The second one’s physical health. These properties have now got gymnasiums and outdoor space, they’ve got room to breathe, they’re not in, I mean my flat when I was at university would’ve been a health-hazard. I’m sure we weren’t meant to be in there. So, 60% of people in PBSA graded their physical condition as very satisfactory, whereas only 32% rated as very satisfactory in halls of residence. So, you’ve got the physical health element as well.
Finally, and probably the most important progression is technology. You’re not going to get super-fast high-speed broadband in a lot of these houses and if you do, you’re sharing the cost of the line between a small number of you. What these new purpose-built, student accommodation developments have is super-fast, dedicated broadband lines, because these students nowadays are constantly on their phones, constantly on their iPads. If they’re not using it to study, they’re using it to watch Netflix or Sky, so, either way, it’s really important. And, in a recent study, 39% in PBSA rated their technology as excellent, whereas only 23% did in halls of residence. So, that difference is quite significant, and because they’re charging slightly higher rates in these PBSA units, they can actually invest the money in making the improvements and keeping the infrastructure up to date. Whereas, in halls of residence, this is an area that they’d typically be known fall down on.
So, that’s it about PBSA, it’s a great market, it’s a very popular market, ok yes, it’s generally based around cash-only, however, we’ll go onto that in other videos. So, that’s the growing popularity of purpose-built student accommodation. Thank you.
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