Student housing turning to blended model to address shortages
An estimated €25 billion is set to be invested by major players in the student housing segment in the next five years, with investors increasingly turning to ‘blended living’ to address housing crises, according to the Class of 2020 student housing think tank.
The annual Class Conference was held in the German capital of Berlin last week under the theme The Future is Blended, with co-living solutions to shortages of housing for students and international talent debated by more than 800 delegates from real estate developers, accommodation operators, governments and institutions.
Opening the conference, Ryan Manton, Programme Director of The Class of 2020, unveiled research by the think tank that revealed at least EU€25 billion is allocated for schemes in the next five years by investors in attendance at the conference. Around €12 billion is expected for purpose-built student accommodation (PBSA), €4 billion for co-living accommodation schemes that are open to all, and EU€9 billion for ‘hybrid’ models that blend student and other accommodation.
Yoony Kim, Managing Director of The Class of 2020, said blended living offers a rapidly expanding investment opportunity and an urban living solution. “The segment provides cities with ways to address their growing housing crisis and a way to attract and retain talent. Co-living and hybrid living can offer affordable, convenient and community-focused alternatives to the accommodation needs of the modern renter.”
The largest investors are predicted to be student accommodation provider Collegiate (€2.3 billion), The Student Hotel (€2 billion) and Greystar (€1.5 billion).
A panel discussion on 'Understanding Shared Living in Alternatives' at the Class Conference 2019.
Charlie McGregor, CEO and Founder of The Student Hotel, which operates blended models at several sites across Europe, said, “Blended living is the reality and it is all about community. We shouldn’t label a student, a young professional, or a hotel guest or an older person. They are all our guests. They are all welcome in our communities.”
In a session on some of the drivers of the co-living trend, Daniel Gorzawski of Harrison Street said that students that have been used to the customised product of PBSA and have graduated were looking for something similar in their young professional careers. Jo Winchester of CBRE said it catered to a transient population that doesn’t want fixed-term contracts, and James Kingdom from JLL said it worked well in addressing housing shortage issues because it is a flexible product.
Samuel Vetrak, CEO of Bonard, said that the student housing sector was now a mature investment sector with one million beds, and that new projects coming to market had learned from previous schemes and were adopting hybrid models. Barriers cited for co-living development were that lenders were edgier over the greater volatility in the shorter-stay segment, local planning policies, and that there are significant complexities for operators in operating shorter-term, hotel-style 24-hour services.
In a special The Future is Blended session, Frank Uffen, Director of Partnerships at The Student Hotel, said that the blended model developed principally in London and Berlin, and has expanded to other European cities.
Ryan Manton (right), Programme Director of The Class of 2020, closing the conference.
Panellists spoke on the goal of developing social spaces in blended living developments and the importance of integrating with the local community. Brian Welsh, CEO ofNido Students, said that there was an appreciation of value and that students were prepared to pay a small premium. Nathan Goddard, CEO ofStudent Roost, said that affordability was still the key factor in attracting, but amazing spaces were required to retain students.
Ryan added, “Future housing models need to be supported by both the public and private sectors. Stakeholders of all types need to come together to innovate, providing affordable and flexible options, which responds to the changing needs of cities.”