Luxury Student Accommodation: A Niche Market Opportunity for Property Managers

Introduction

The trend of seeking higher education from reputed universities offering integrated courses is the yellow-brick road to steer a student’s professional journey. Moreover, the urgent need to build safer and healthier homes has become a critical requirement due to the rising global concerns surrounding student housing.

In today’s world, mental health and well-being play a pivotal role when it comes to living away from home. Students are actively searching for student-friendly homes, located close to the university and offer a balanced social life. More and more students are opting for luxury student accommodation that provides all the features needed to live comfortably and even lavishly - by student standards. Hence, it brings the responsibility on the shoulders of property managers to help students find their dream homes by offering the best amenities at an affordable price.

On the other hand, several factors entice students into paying higher rents in order to secure the best accommodation. This blog attempts to assist property managers in enriching their properties to churn out profitable rental yields from accommodations in high-end localities located close to esteemed and well-known universities.

Luxury Student Accommodation Levels-Up Amidst Skyrocketing Housing Demand

The student housing crisis and limited According to the NEI Global Relocation, global rent has witnessed a surge of 23.5% since 2019 and has also projected a compound annual growth rate of 7.02% for rental properties until 2027. On the same front, students' preferences and trends make it integral for property management groups to offer luxury student accommodation at affordable prices, making it an ironic scenario in the student housing market. However, there are multiple factors affecting the increasing rent of student homes:

1. Inflation Soars & Prices Roar: The ever-increasing inflation directly affects rental pricing and costs while also raising food prices. According to the Office for National Statistics, the Consumer Prices Index (CPI) rose by 7.9% in June of 2023, ultimately increasing the prices of energy, food, alcohol and more. As the rental prices increase, the cost of accommodation rises as well. Students tend to budget their expenses to avoid living at a property with high rentals. However, students with high-end budgets seek luxury student housing options irrespective of rental prices.
2. The Disparity of Supply vs Demand: Apart from purpose-built student accommodation (PBSA), there are multiple types of housing options available including HMOs, co-living spaces, etc. Despite the increasing growth of student accommodations, there is a massive disparity in the supply of beds to meet the demand for good accommodations. “With student numbers rising, the unmet demand is likely to grow – as construction inflation remains elevated, limiting the potential for additional new supply,” says Julia Martin, EMEA head of Student Housing at JLL.
3. Region-Wise Economic Conditions: There are various cities in first-world nations that contribute heavily to the GDP of the country. Universities under the umbrella of high-end countries have high interest rates and rents, increasing the housing costs of students seeking accommodation. As per the Office for National Statistics, the average cost of renting a house in the UK was 2.4% higher in March in comparison to last year.
4. High Mortgage Rates for Landlords: The ever-increasing competitiveness of the property management groups operating in the market can be due to the historic rise in pre-lease rates and occupancy levels are also slowly making premium living a norm. A gradual shift from traditional dorm living to the private student housing sector has been caused by changing student preferences. Hence, property operators are now trying to attract more students by offering amenity-rich facilities and an overall high quality of living to capture a higher market share.
5. Gentrification with Student Homes: Urban gentrification is boosted by the addition of modern amenities as well as entertainment provisions. For instance, according to the Journal of Global Education and Research, students of upper- and middle-class backgrounds get accustomed to quality living spaces in their domestic homes and seek such standards of living even away from home, driving their interest in luxury student accommodation. This also helps improve the area located close to reputed universities, making it a more attractive option for applicants to consider.
6. Increasing Demand for PBSAs: PBSAs are generally considered to be premium options in the student housing market. However, the increasing number of students prefer PBSAs, since it has proved to be more cost-effective in the long run, due to its all-bills included policy. The pupils staying in other types of accommodations have to pay additionally for utility bills which in effect is proving to be a more expensive option for most students.

From an “Accommodation” to a “Luxury Student Home”

Luxury student accommodations promise to offer an extravagant lifestyle to students travelling from their home countries to progressive countries in order to seek a better lifestyle. Students from affluent families look for extravagant accommodations to enjoy a slice of luxury living. According to experts at amber, well-designed and comfortable living spaces are key to attaining a well-rounded university experience. Here’s how you can upscale your property to successfully cater to the demands of the students.

1. Offering High-End Amenities: If you want to increase the value of your home, it’s essential to equip luxury student accommodation with high-end facilities and amenities. Property managers consistently need to renovate their student homes to make them more attractive to the target audience. This can include a variety of offerings including free high-speed Wi-Fi, fitness centres, cinema rooms, communal lounges, concierge, electronic locks, digital software for security, and more.

2. Look for Student-Friendly Neighbourhoods: Student homes located close to campus are usually preferred by them since they are easier for everyday commutes. However, more so than that, they prefer student-friendly neighbourhoods and vibrant social spaces in the vicinity of the property. Apart from this, students also like to book luxury student accommodations located near city centres and public transport links.
3. Target the Right Audience: Many property operators convert student homes into high-end properties in prime locations and rent them to affluent students. These international or domestic applicants moving to a well-known and popular location either have student loans or belong to wealthy households. Hence, targeting the right audience is essential to highlight your property to potential renters. As the niche market of luxury student accommodation continues to surface, it can become a great opportunity to target affluent students.
4. Digitalize Property Presence: Several digital property management software are available that assist in financial management, rental applications, inventory tracking, and marketing. In today’s digital age, students prefer authenticated online platforms for their convenience. Popular PMS platforms include Builium, Appfolio, Rent Manager, and many more. You can choose a platform that best suits your requirements.
5. Tap Into Private-Rented Sector: As the number of PBSA beds has a higher occupancy rate, students who get accepted into universities a little towards the peak booking season, miss out on university-affiliated or private PBSAs. The private rented sector is emerging with various offerings including HMOs or co-living spaces, which can be converted into luxury student accommodation with renovation and revamping.
6. Competitive Analysis of Student Homes: It’s always a good hygiene activity to understand what your competitors are offering to students and improvise with your property in accordance with the facilities. For instance, if the most popular student homes in the locality have cinema rooms or on-site gyms as their unique selling points, it’s essential to highlight your luxury student accommodation property with additional services including housekeeping or even essential security features

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How Amber Optimizes Occupancy Rates for Luxury Student Accommodation Operators

May the student property you offer be affordable or luxurious, it’s integral to know your audience and target the right group to optimize occupancy rates. Maximizing profits can be a long-term goal, but it’s essential to maintain a good digital presence in comparison to your immediate competitors.

1. Expanding your brand’s reach & exploring newer markets: Amber is a top global student aggregator with a record of 9.23 million website student visitors. Not just that, it accounts for over 55% of the website traffic share from key regions in major source countries for students who enrol in higher education in top institutions. Moreover, amber also helps to explore newer source markets in unfamiliar geographical territories and demographic segmentations.

2. Exclusive Insights & Partnership Benefits: Amber Student Housing Partners Report provides exclusive insights and opportunities to tap into profitable markets. In helping PMGs drive early booking cycles, amber partners with property management groups to deliver tremendous value and results. For instance, amber helped AXO Students, a top property operator in the UK, complete a booking for 260 beds, in the supply-rich city of Coventry.
3. High Return on Investment: Along with an integrated student housing solution, amber’s global reach in over 160+ source countries brings in a wide & diverse student base for your properties. This way, operators can have an edge in making their properties visible to a larger student base. Furthermore, we also help in lowering the customer acquisition cost for property operators looking to maximise value and optimise occupancy rates. Even for properties that have higher rent, amber successfully manages to drive early booking cycles and sell out the property during peak booking season.

Conclusion

It’s integral to understand and target the right kind of audience in accordance with your offerings. If your property caters to providing high-end and luxurious offerings, it’s essential to target the demographic seeking luxury student accommodations. Amber plays a pivotal role in helping boost occupancies of PMGs that offer luxury amenities in homes located in posh neighbourhoods. If you want to be on top of the luxury student accommodations scenario and emerge as the right choice, don’t miss out on listing your property with amber.

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