One of the most interesting issues with regenerating city centres is the debate which comes along with it. Deciding what should be refurbished and what should be done away with entirely is a passionate issue for many people.
Purpose-Built Student Accommodation (PBSA) attracts more passionate debate than almost any other type of regeneration – though the reasons why are unclear. Regardless, lots of people feel strongly about the current trend for big new PBSA blocks, and many are openly wondering whether we are building too many and creating an oversupply in our cities.
A good example of this is Liverpool where articles regularly appear in the local paper, the Liverpool Echo, debating the pros and cons of PBSA development. It is true that Liverpool has seen a large number of student developments in recent years – but are there really too many?
The current demand from students in Liverpool suggests not; for example, developer X1 consistently reports 100% occupancy in its student developments in the city, with a large number of tenants choosing to stay on following their initial year.
It is also worth noting that many new student developments are not actually adding capacity to the market; in lots of cases new developments are simply replacing older developments which are no longer fit for purpose. Obviously, in this case a new development would have a neutral effect on the existing demand.
From the other end of the spectrum, the very fact that more and more money is being put into new developments shows that investors remain confident in the market. Interestingly, many of the newest investors in the market are large funds which are making the move from traditional residential developments – a big step they wouldn’t be taking if they weren’t sure of the profits.
Companies like Unite are investing hundreds of millions of pounds into thousands of new student units because they can see that the demand is there.
The University of Salford is a good example of how demand is not going to flatten anytime soon. More than 90% of local students are forced to rent privately due to the lack of accommodation provided by universities. If a high quality PBSA development is built which provides a premium living experience at reasonable prices when compared to regular private housing, it does not seem likely that students will forego it.
Fundamentally, there is a lot of PBSA being built at present, but the sheer number of students looking for good accommodation during their university years means that we are a long way off saturation. When looking at the number of cranes in a city like Liverpool it may seem like there is too much being built, but the truth of the matter is slightly different.