House View
PBSA outlook remains positive Q1 2021 ○ Appetite for PBSA investment remains strong with sizeable portfolios transacted in the UK and Europe already this year and yields stable or compressing across most core cities
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Across Europe, all major cities have less than half a bed available per student, with Paris at 16 students per bed, Copenhagen 25 students per bed and Warsaw at 28 students per bed
○ Investors are seeing a W shape recovery for PBSA with a final uplift expected in September 2021
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In most European cities, there is an opportunity for developers and investors to plan well-designed high quality operated private student accommodation with Germany in demand in particular. Round Hill Capital and Nido have already acquired two more assets in the country this year and plan to do more
The UK sector remains undersupplied with some construction ○ delays combining with an overall reduction in planning applications contributing to a constricted pipeline
PBSA Investment Market Outlook, ○ Round Hill Capital and Nido continue to expand our portfolios across February 2021Europe in PBSA with new developments and operating schemes in
cycle & as Europe, the ○ There may be further dislocation in the 2021/2022 UK timetable for A level results and places is already confirmed to be delayed, but this augurs well for those PBSA operators who can attract students (and their parents) with a more safe and highquality offer ○ Consumer confidence is riding high post the UK’s successful vaccine roll out – it is expected that this will translate to both domestic and international students ○ Nido’s own research highlights that 85% of students were still planning to move away from the family home for their studies whether learning was online or physical ○ PBSA looks set to benefit from an increase of applicants to Higher Education seeking safer and higher quality accommodation in 2021/2022. The UK saw an overall increase of 3% in 2020 despite other countries such as North America seeing lower levels of applicants ○ Despite lockdown, it is estimated that an average of 50% of students remained in their private accommodation, cementing the need for privately operated residences to remain open and serviced. Operators have noted a steady rise in student occupancy over the last few weeks as sentiment improves across Europe ○ The average student budget has increased 5.5% year on year with 84% of all students saying accommodation was affordable and 69% of private PBSA students feeling satisfied with their operators, compared to just 25% in privately rented house shares ○ The UK Government has put into place a number of measures to support PBSA including a £70m pot for student financial support, the extension of visas for international grads and post-grads staying in the UK after qualification, and a formal target of hosting 600,000 overseas students in the UK by 2030
House View – PBSA Investment Market Outlook, UK & Europe, March 2021
Germany, Denmark, Ireland, Portugal and Spain
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Nido remains positive for strong levels of occupancy across its portfolio in 2021/2022, with an expectation for rental growth
Brian Welsh, Head of Student Accommodation at Round Hill Capital, says: “The case for investment in PBSA remains strong and the outlook positive. We are seeing investors accessing the sector whether directly or via funds and institutions as they see the long-term stability of the sector, particularly in the UK, which continues to hold its place in the top global ranks for education. In addition, student demand continues to rise for private PBSA. Our own research tells us that students want to be away from home whether they are learning online or not and, with lockdown easing post Easter, we expect the number of students returning to their residences to rise even further. This, coupled with favourable policies being put in place to attract overseas students and the successful progress of the Covid vaccine roll out to date, means that we are expecting BAU from September 2021 and a strong academic year for investors and operators which will hopefully also mean a top-quality experience for students is delivered.”
For further discussions on PBSA please contact Brian Welsh / Round Hill Capital OR Darren Gardner / Nido COO.
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