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Inception to occupation – what’s behind an emerging property?

Inception to occupation - what's behind an Emerging Property?
Jan 11, 2017

If ever you see a group of chattering students heading off on the short walk to lectures from their student accommodation block, spare a thought for how they came to be there.

It’s easy to take student property for granted; indeed, as an Emerging Property owner, you should take it for granted; effortless income is what it’s all about.

But there’s a lot more to a successful student development than meets the eye. A lot of painstaking research and due diligence has to be carried out before a barrow is wheeled in anger.

Location first, location last, location always

Close-to-campus student property investments

Of course, you need to find somewhere with a university.

But with around 150 degree-awarding higher education institutions across the UK, you have to pick the right one.

Simple economics rule out the capital and flagship university cities like Oxford and Cambridge. Principal regional centres such as Birmingham and Bristol are also prohibitively expensive, while others such as Liverpool, Manchester and Newcastle are approaching saturation point for Purpose Built Student Accommodation (PBSA).

Student numbers – still on the up

In fact, the 2016/17 intake set yet another record for new admissions. But overall numbers are only part of the story – what you ideally want is a specific university that can demonstrate consistent or increasing popularity with students.

A regular rise in the student population, an upward trajectory in the rankings and plans for campus and facilities expansion are all good indicators of a university with ambitions for the future.

Choice of university not solely study-based

Student property investments in fast-developing local economies

The town itself is also important; students want to be somewhere lively, vibrant and fresh.

So the strength of the local economy is an important factor to consider; significant inward investment is a sign of sustained prosperity. Look out for recent or upcoming urban regeneration projects which aim to transform the place.

It’s also worth exploring the relationship between town and gown; a city which encourages collaborative initiatives with its university and vice versa is a place where you’ll find a genuine sense of community.

And where there’s a sense of community, there’s a safer, happier place to be.

Trains, planes and automobiles

Good transport links are important too. Most students are leaving home for the first time, so their natural sense of adventure demands the opportunity to explore their surroundings – nobody wants to feel they’re stuck in one place for weeks at a time.

The overseas student market is important too; there are around 450,000 in the UK at the moment, so easy access to international air and rail links is a must.

These students are a crucial demographic in PBSA, as many of them sign for longer term rental periods – they’re looking for a place to call home for a few years. They’re also happy to pay a premium for high quality, efficiently managed accommodation which, with the pound in the state it’s in, is the most affordable it’s ever been.

And of course, they contribute enormously to both the national and the local economies.

The next, absolutely critical consideration is to analyse the current and prospective local availability of PBSA.

76% – current UK average undersupply of PBSA

Chose a university that is investing heavily in infrastructure

This leaves just 24% of students able to access their preferred accommodation type.

Industry analysts work to a figure of 40% access as the definition of saturation, so you’ll be looking for a figure way below that.

You’ll also need to find out if anybody else is planning a development in the area. A recent report in the Financial Times showed that there are currently 525,000 PBSA rooms in the UK, with planning consent for nearly 90,000 more and permission sought for a further 44,000.

That’s not going to make much difference to the national supply, but you don’t really want them anywhere near you.

The next thing is to find a suitable site; it doesn’t matter how promising a town or a university seems, you need as prime a site as possible at as sub-premium a price as you can negotiate.

Everything on the doorstep

One of the things students really do look for is proximity; they want to be as close to their campus as possible, but they also want to be able to hit the town without too much effort.

So now you have a plot of land in a highly accessible part of a thriving university town; to make the most of it, you need a developer who knows what they’re doing.

There’s no substitute for experience

Experienced student property consultants

Our developer partner has been deeply involved in Student Property since the very earliest days of the sector. With 16 successful student developments behind them and a 17th under way, it’s fair to say they are experts in the field.

They are the only NHBC-accredited student developer and have won an award from the same organisation for their build quality.

Uniquely, therefore, they provide a 10-year build warranty for maximum investor reassurance.

They know the sort of accommodation students prefer and the kind of facilities they find attractive. They employ specialist architects, surveyors and construction crews who know the sector inside out and always deliver a high quality build on budget and on schedule.

They also keep investors fully up to speed with project progress, supplying regular photographic updates and organising site visits.

Experience has also taught them about the economies of scale to be made which keep costs down and maximise yields.

Because their developments consist of 100+ individual units to be sold to investors, this helps when negotiating the site’s purchase price.

Properly built, properly run

It also makes complete economic sense to install a management team onsite 24/7, rather than parachute them in as and when necessary. This and other economies of scale, like regular maintenance and centralised bulk buying, make a professional management service a better and cheaper option.

Emergency repairs can be carried out on the spot and security is enhanced by a permanent presence along with CCTV and fire alarms directly linked to the emergency services. It also ensures adherence to Health & Safety regulations – something you wouldn’t like to entrust to a bunch of students.

Open for business

Stoke Student Property investment

When the property is nearing completion, the team will assume all responsibility for letting, vetting, rent collection and yield delivery to owners. They are incentivised to ensure maximum occupancy.

And because they’re also incentivised to keep the entire development in prime condition, they look after it like it’s their own. Regular room inspections allow potential problems to be identified early on and the residents are made aware of their tenant responsibilities right from the outset.

The management often employ a few of the tenants on a part-time basis. This ensures good lines of communication with the students and encourages sensible behaviour.

The teams also organise events and activities for residents and other students living elsewhere. These act as part of a local marketing and branding campaign, which makes the student body aware of the property and helps boost future occupancy rates.

And throughout this whole process our investors have had to do nothing more arduous than to visit our website and find out everything they need to know about student property.

Discover our available student property investments

 

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