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2. uK tailwinds & Headwinds

Tailwinds

Demand

○ Applications and acceptances for places at most Universities are up year-on-year from domestic and international students with UCAS/Knight Frank predicting an increase of over 5% for the whole 2021 admission cycle. They also reported a record-breaking surge in interest from applicants on 15th October 2020 with strong UK and international demand

Nido’s own research shows that 85% percent of students were planning to move away from their family home for their studies or were considering doing so, with just 15% saying they were planning to stay at home 26% of all students are in private PBSA and the figure rises year on year with the most popular accommodation being 6-bed clusters with over ¼ of all private tenancies in this category according to Sturents

Up until December, 85% of all private leased beds were occupied across the UK according to JLL. While this figure will have changed since the third nationwide lockdown, the signs are that significant numbers of students are utilising their private accommodation in some format, cementing the need for privately operated PBSA to remain open. Leeds-based PBSA charity Unipol in particular highlights that increasingly students are returning to their private accommodation with figures of 50% currently in private PBSA and rising weekly. They cite students wanting to retain independence as the main driver to leave the family home despite the pandemic Between 50 and 70 percent more students stayed in Nido residences over Christmas compared to previous years, while an average of around 50% have utilised their accommodation so far in January 2021 (since the latest lockdown)

In the UK (excluding London) the average student budget has increased 5.5% year on year which augurs well for future demand for good quality private accommodation Knight Frank’s recent research highlights that 84% of students felt their accommodation was affordable, regardless of the type of accommodation

○ Students are still prepared to pay a premium for PBSA with superfast Wi-Fi connectivity the number one ask of students, according to Knight Frank, which also revealed students would pay more for 24-hour security, a larger bedroom, a bigger or comfier bed as well as on-site facilities

Moreover, 69% of students in PBSA were pleased with their accommodation provider compared to just 25% of those living in house shares within the private rented sector according to Knight Frank

There has been little evidence of release clauses being exercised– with all operators expecting an increase in leasing activity come September 2021, according to JLL There is a growing insistence that the Government step in to support student rents, to bolster the efforts made in 2020 by PBSA operators and investors - an announcement on 2 Feb 2021 indicated there would be an additional £50m put aside to help students in financial distress. This brings the current government financial support available to students to £70m

Policy for PBSA is becoming more favourable as the Government begins to understand the long-term attractiveness of the asset class to investors, and the ongoing draw the UK has as a global education epicentre.