PBSA Real Estate 101: Everything About Purpose-Built Student Accommodation

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Student housing is constantly evolving to meet the ever-changing needs and preferences of students when selecting their accommodation. The current generation is looking for housing that can provide them with more than just a place to stay. This behavioural pattern is increasing the demand for quality housing, creating a huge opportunity for the PBSA real estate sector. As a result, purpose built student accommodation is gaining popularity as a premium asset class that caters to overall student well-being.

The unique concept of community-friendly homes is leading to low tenant turnover rates. It presents PBSAs as a lucrative opportunity for developers and investors to generate high ROI (Return on Investment). There are approximately 13,676 PBSA facilities worldwide, with major regions including the UK, the US, Asia, and Australia. The majority of these properties are managed by private players, comprising a total of 2,255,678 beds, catering to the high demand for accommodation.

This comprehensive guide aims to provide a deeper understanding of purpose built accommodations for students. It further discusses the factors contributing to the sector’s growth, major operational challenges, investment opportunities, and the future outlook of PBSA real estate market. Let’s begin by understanding what these property types are and how are they different from traditional student housing.

What Is Purpose Built Student Accommodation (PBSA)?

Purpose built student accommodation is categorised as housing specifically built to cater to university students, developed by private developers and operators.

Its main focus is on housing options near universities, top-tier inclusive amenities and ultra-modern facilities for a convenient stay for young tenants. These purpose built properties have two types including on-campus accommodations and off-campus accommodations, they are:

1. On-campus accommodations: On-campus purpose-built student accommodations (PBSAs) are specifically constructed to house students within or adjacent to a university or college campus.  These are well-established properties, at times co-managed by universities and private players together. These student halls could be ensuite halls, primarily including two types:

• Private accommodations: Ensuite student halls offer private rooms and bathroom facilities, with a shared kitchen focusing on both privacy and comfortable communal living. These could also be catered halls providing on-site dining facilities to students.
• Shared accommodations: These student accommodations are halls that provide shared rooms for a budget-friendly stay. Such on-campus student halls offer shared bathrooms, communal living areas, kitchens, and recreational spaces as well as dorm rooms.

2. Off-campus accommodations: Off-campus purpose built student accommodations are privately owned and managed properties, specifically designed to cater to the housing needs of university students. These off-campus housing options include:

• Standard apartments: These apartments are the most common type of PBSA apartments which typically offer private bedrooms within shared units. They include communal areas like shared kitchen, living rooms and bathrooms.
• Luxury apartments: In recent times, PBSAs also include luxury apartments, specifically built for students seeking premium living experiences and state-of-the-art amenities. These apartments target students willing to pay a premium for enhanced comfort and convenience.
• Mixed-use apartments: Some purpose built student accommodations are nestled in mixed-use developments which combine these living spaces with retail, dining, and entertainment options. The primary purpose of such PBSAs is to offer students convenient access to amenities and services, creating vibrant living experiences.

Different Types of PBSA Rooms

Purpose built student housing offers a wide variety of room types available for students to choose as per their requirements, budgets and preferences. Here are the room types available:

• Ensuite apartments: These student ensuite apartments are self-contained units that provide residents with private bedrooms, bathrooms, and a shared kitchen. They also offer multiple young generation-centric facilities for a convenient and hassle-free living experience.
• Non-ensuite apartments: Purpose built non-ensuite apartments offer the same amenities as an ensuite apartment, like a private bedroom, but with shared bathrooms and a shared kitchen with other flatmates. These are the best options for budget-friendly stays in PBSA properties, especially for students with a budget crunch.
• Studio apartments: Private studio apartments are self-contained ensuite accommodations that focus on independent living for students. They commonly consist of a bedroom, a small kitchenette, and a private bathroom.
• Private or shared apartments: Private or shared apartments offer learners the benefits of private bedrooms, although they have common shared areas like a kitchen and a living room. Such apartments not only highlight privacy but also community-friendly living, giving students a chance to socialise with peers if they choose to share the room.

What Are PBSAs Known as in Major Countries?

PBSA real estate varies from country to country and is renowned under various names to meet the ever-growing student accommodation needs. A few popular ones include:

• Europe: It is commonly referred to as "Purpose Built Student Accommodation.”
• United States: These accommodations are often called "Purpose Built Student Housing."
• Canada: Similar to the US, student homes in Canada are commonly known as "Student Residences" or "Purpose Built Student Housing."
• Australia: PBSAs are typically referred to as "Purpose Built Student Accommodations.”

Each country might have unique characteristics and services associated with its student housing. Still, the core purpose remains the same: providing a living space that caters specifically to the needs of university freshmen.

How Has the PBSA Real Estate Sector Evolved?

The enrollment numbers in higher education universities worldwide have substantially increased over the past two decades. The total college enrollment reached 18,939,568 in 2023 (Source: Education Data Initiative). With the consistent rise in applicant enrollments, the demand for student housing has also rapidly surged, as so needs safe, secure, and comfortable living.

The UK PBSA real estate is by far the most mature market in this private sector, following high student housing investment volumes.

The year 2022 witnessed a record-breaking £8 billion investment volume in the PBSA sector. Even though the sector experienced a decline in student accommodation REIT volumes in 2023 due to market volatility and other economic reasons, it still managed to reach £2.5 billion.

With favourable debt markets, the decline in inflation, and the ongoing economic recovery, investments in this sector are expected to improve in 2024. Moreover, according to Unite Student, a top PBSA provider, rental growth of 5% is projected for the 2024-25 academic year.

Rise of PBSA Real Estate in the US & Australia

The US boasts the potential for the fastest PBSA real estate market expansion, driven by favourable immigration policies and the presence of top-tier universities that make it a hotspot for real estate investment. This has attracted major players like Blackstone and Greystar, injecting billions into developing premium asset-class facilities. With student visa backlogs easing and green card pathways emerging, North America presents a compelling investment proposition. The student housing market in USA is valued at $131Bn as per Amber’s US International Student Housing Annual Report 2023-24.

In Australia, the cost of living, particularly housing rent, has escalated by 10-20%. Despite these cost pressures, the student housing market has experienced significant growth, now estimated at AUD 10 billion, with a CAGR of 17%. Interestingly, the majority of this market is dominated by off-campus accommodations, indicating a strong preference for PBSA. (Source: Economic Times)

Why Do Students Choose PBSAs Over Traditional Housing?

Over recent years, a notable transformation has been observed in the preferences of students for housing. Modern conveniences, eco-friendly choices, and the preference for personal spaces have gained more importance with changing preferences, compelling learners to choose private purpose built student accommodation (PBSA) instead of traditional housing options.

PBSA real estate is specifically designed for students, whereas traditional housing caters to young professionals and families. Here are the key differences between traditional student housing and PBSA real estate properties:

1. Location: PBSA student accommodations are thoughtfully designed to meet the specific needs of students and are strategically located near universities to prioritise convenience for the learners. Traditional housing, in contrast, is often spread across various neighbourhoods without a specific focus on proximity to educational facilities, potentially resulting in less convenience for learners.
2. Amenities: PBSA real estate properties stand out by offering dedicated study rooms, game zones, and fitness centres, enhancing the overall tenant experience. Traditional housing offers a more basic residential environment without the added benefits tailored for students. As a result, students may be required to rely on public places for social events and libraries for academic purposes.
3. Lease terms: These student housings offer flexibility in lease terms, aligning with academic calendars and providing options like semester-wise stays. On the other hand, traditional housing typically follows standard lease terms with the academic year, creating challenges for learners during academic breaks.
4. Cost structure: The rents may appear relatively higher, but most of the properties cover all utility expenses or all bills included in the rent, like electricity, heating, gas, etc., and also free high-speed Wi-Fi. Conversely, in traditional housing, the initial rent might seem lower. Still, residents need to bear additional expenses for utilities, internet, and maintenance, which can accrue over time, increasing overall living costs.
5. Privacy standards: PBSA properties provide residents with the choice of private bedrooms or shared spaces with limited roommates, emphasising individual privacy. Traditional housing, particularly in shared arrangements, may not guarantee the same level of personal space.
6. Safety & security: PBSA real estate properties are generally equipped with 24/7 security, controlled access points, and surveillance systems to prioritise the safety of their residents. Additionally, these student accommodations are situated in safe localities, aiming to create a secure environment for scholars. Traditional housing may have varying security measures that may or may not particularly focus on the safety of young tenants.
7. Eco-friendly: Some prominent PBSA real estate operators integrate energy-efficient features and waste management initiatives while developing properties, contributing to a more sustainable living environment. Traditional housing does not specifically prioritise eco-friendly practices.
8. Community focus: PBSA actively focuses on cultivating a strong sense of community by organizing events and activities. This builds a sense of inclusivity and fosters a positive environment for learners. Conversely, community building in traditional housing depends mainly on the surrounding neighbourhood and pre-existing cultural norms and may not inherently encourage forming a strong student community.

What Are the Key Growth Drivers of the PBSA Market?

The growth of PBSA real estate is driven by dynamic factors that adeptly address the evolving preferences and trends of university applicants. The following section highlights the key factors driving the sector’s growth currently:

1. Rise in international student population: The increase in international numbers has significantly contributed to the PBSA student accommodation emerging as a preferred choice. Students often seek accommodation that offers a supportive and inclusive environment, making it a preferred choice.
2. Return on investment: PBSA portfolios have provided the maximum return on investment within the real estate sector to global investors, standing at an average YoY total return of 7% to 10%. This beats the average ROI given by other asset classes such as office spaces, restaurants, retail, hospitality, etc.
3. Global trends: The growing demand for the sector attracts significant student housing Investment and developer interest, leading to the construction of more such properties. As university enrollment increases globally, the need for quality living spaces rises, positioning the purpose built student accommodation sector’s growth in the coming years.
4. Quality living: Young adults prefer modern amenities, safety features, and community engagement, driving the popularity of these properties. These properties often provide these desired features and contribute to the growth in the number of PBSA real estate properties.
5. Rental growth: Factors such as a rising student population, the need for quality living spaces, and unique amenities offered can enhance rental prices over time, significantly contributing to the rental growth of these property types in the market. In 2023, the rental increase for PBSA studios in the UK was nearly 13% YoY. Moreover, the strongest rental growth was recorded for the 2023-24 AY at 8.02%, according to a recent Cushman & Wakefield report.
6. Partnerships with universities: Collaborations between premium student housing investors and universities enhance the availability and accessibility of accommodation options, positively influencing growth.

Current Market Trends in PBSA Real Estate Business

As a steady real estate asset class, PBSAs have continued to report positive reviews from students who have been satisfied with their stay in this type of student housing property. However, there are a few trends that are expected to shape the future operations of PBSA real estate, including:

1. Market intelligence & real-time data analysis‍

Despite economic downturns and geopolitical issues, this asset class is projected to remain resilient and recession-proof owing to low-supply, high-demand markets. However, property operators need to constantly monitor market conditions to future-proof their businesses through market intelligence and effectively conduct risk assessments. Property management groups can effectively manage risks without disrupting cost-revenue structures by implementing asset pricing models or dynamic pricing as per requirement.

2. Brand messaging & marketing initiatives

‍PBSA real estate has a prime focus on selling an experience or lifestyle to students, although the primary goal is to improve trust among the tenants. With positive word-of-mouth reviews and user-generated content through testimonials, brand messaging can be a great differentiator to help highlight a property from competitors. With virtual video tours and high-definition visual content marketing efforts, property management groups can boost the visibility of their properties to attract more students from targeted regions.‍

3. Maintaining a sustainable footprint & green initiatives‍

In recent years, with the rising awareness of sustainability and ESG impact, learners have a positive outlook toward carbon-neutral buildings and technologically advanced properties. Environmental, social, and governance (ESG) agendas play a role in the new generation’s choices. According to a report by First Insight, 73% of Generation Z consumers are willing to pay 10% more for sustainable products.

• In the UK, BREEAM (Building Research Establishment Environmental Assessment Method) is a sustainability assessment method and certification for buildings, widely used to evaluate and certify the environmental performance of buildings. For instance, GB Building Solutions and Balfour Beatty Engineering Services (BBES) recently achieved the highest-ever Design Stage BREEAM rating globally for their student accommodation project “The Green” in Bradford, scoring a groundbreaking 95.05%. The £30.4 million project sets a new standard in environmental performance.

• On the other hand, in the US, LEED (Leadership in Energy and Environmental Design) is a certification program developed by the U.S. Green Building Council (USGBC) that assesses and approves buildings for their environmental performance and sustainability. For instance, Sterling University Housing's project, Sterling Burbank near Louisiana State University, has achieved LEED for Homes Platinum certification, making it the largest of its kind in the US, recognised for its energy efficiency and sustainable design.
• In Australia, student accommodation providers are increasingly prioritising sustainability due to factors like escalating energy costs, heightened environmental awareness in real estate, and rising demand from learners for eco-friendly living options, as reported by University Living in Australia's Student Housing Market, 2023.

4. Student preference for PBSAs persists despite high cost

As the properties offer inclusive amenities, they are generally higher in cost as compared to other student property types. Initially, houses of multiple occupations (HMOs) were a preferred option since they were cheaper. However, learners globally now prefer purpose built accommodations since these properties offer a cost-effective solution to young adults for managing living expenses.

Young tenants do not need to worry about additional bill payments like gas, electricity, heating, etc., as they’re already included in the rent. Moreover, these property types also foster a sense of financial security, effectively highlighting the benefits over the cost, projected to maintain its position in the upcoming years.

5. Fostering student well-being, community, & mental health support‍

PBSA real estate properties are budget friendly yet high-quality housing option that also caters to the overall well-being of learners. To succeed academically, students prefer this property type since it plays a role in supporting their mental health and well-being through social gatherings, community events, on-site support groups, etc. As a result, these young adults are willing to pay price premiums for properties that support their well-being.

What Drives Student Accommodation Investment Opportunities?

The purpose built student accommodation category has remained a resilient real estate asset class, owing to sector evolution, institutionalisation, and development of markets in the UK and the US. Investing in PBSA real estate has its own set of advantages, including:

1. Consistent student demand: The requirement for student housing, especially purpose built housing, has increased in recent years. According to HESA data, in 2021/22, 2.2 million full-time students were enrolled in higher education institutes across the UK. In contrast, the US recorded 18,939,568 enrollments in HE universities.

2. Strong rental yield & high ROI potential: In comparison to buy-to-let investments, the purpose built student accommodation sector reflects strong rental yield and gross income growth. The UK PBSA assets recorded positive total returns, standing at 7.7% despite challenging market conditions. Moreover, all assets registered a gross income growth of 10.5% in September 2023, while net income growth was observed at 9.8%.‍

3. High rental growth: This PBSA real estate asset class has previously averaged 5% rental growth in 2022/23. In the current academic cycle of 2023-24, rental growth is predicted to be between 6-7%, owing to high occupancy rates and increasing PBSA schemes in major countries, especially the UK. In markets where the shortage is extreme, this sector is likely to outperform its other student housing real estate counterparts.‍

4. High occupancy rates: Depending on location, PBSA real estate properties usually have high occupancy rates and low vacancy voids owing to multiple factors like inclusive amenities, well-maintained spaces, and positive landlord-tenant relationships. Moreover, PBSAs provide various offer incentives for lease renewals to attract more student tenants in high-prime cities.

For instance, in the US, the student housing industry has maintained stability with an impressively high occupancy rate of 95% as of November 2023 (Source: College House). In the UK, a staggering 98% occupancy rate has been observed.

5. Student accommodation REIT opportunities: Student accommodation real estate investment trusts (REIT) are players who acquire, own, manage, and sometimes develop student housing properties, like dormitories or apartment complexes, in proximity to colleges and university campuses. Multiple REIT opportunities in student housing are crucial for the efficient construction and management of properties with assistance from public-private partnerships (PPP or P3) to provide affordable and quality housing to students.

For instance, the American Campus Community, owned by Blackstone REIT, has fulfilled more than 115 PPP transactions with 65 colleges and universities across the United States to provide more student housing to meet housing requirements. (Source: NBER)

6. Investment opportunities in PBSA sector: Real estate investors across world have an optimistic outlook of the PBSA sector with stable investment volumes being recorded in the past few years. Undersupplied student housing markets like Spain, Italy, Canada, Poland and Portugal have consistently gained global investor interest, promising high returns. Moreover, the capital demand for the PBSA sector is expected to grow through pension funds, long-term holders and core capital investors.

What to Consider Before Investing in PBSA Real Estate?

‍There are certain factors investors need to keep in mind while investing in PBSA assets. It involves a comprehensive property assessment, taking various factors into account, such as university requirements, the number of post-graduate and graduate student residents, annual rental income projections, and more:

1. Profitable location: When considering an investment in PBSA real estate property, investors need to prioritise the project's location as a primary factor. Ideally, the PBSA developments target pedestrian-friendly locations, where the scholar population is higher with major universities nearby. In the UK, for example, IQ Student Accommodations strategically markets their properties near Russell Group Universities and Colleges. It has become one of the major reasons for Blackstone’s interest in acquiring IQSA’s portfolio.

2. Funding & financial considerations and audits: When investing in PBSA real estate, careful financial planning is key. Investors should not only allocate funds for development but also consider possible delays and unforeseen expenses. Collaborating with reputable real estate agencies and research & audit agencies can ensure any challenges with respect to land acquisition, construction, and overall project development.

3. Rental and occupancy projection: Investors rely on market analysis to project rental income and occupancy rates accurately from PMGs and developers. This involves assessing current student housing demand, local rental trends, and the competitive landscape. Projections are based on factors such as university enrollment figures, student demographics, historic rental trends in the area, and the economic factors in play. With the help of these projections, investors can analyse the profitability of their version by assessing projected occupancy levels, rent levels, and ROI per unit.

4. Amenities offerings & operational costs: Efficiently managing operational costs is paramount for the sustained success of PBSA real estate properties. To achieve this, investors need to plan for operational expenses until the property attains financial self-sustainability. Collaborating closely with the chosen operator, investors should vigilantly monitor and analyse ongoing costs like maintenance, utilities, and staff salaries. The implementation of cost-effective solutions while maintaining quality standards ensures the enduring financial viability of purpose built student accommodation in the long term.

5. Return on investment: Like any other business, the immediate focus of any investment is achieving a profitable ROI. Investors should measure the financial performance of their invested properties over time, considering factors like market dynamics, property appreciation, and current student needs. A well-executed PBSA real estate project not only provides a steady income stream but also contributes to the overall growth and reputation of the investor and property management group.

6. Efficient supply chain: To verify the viability of a PBSA real estate project, it is usually not enough to just have a reputable developer on board. It's crucial to guarantee a steady supply of materials for PBSA development. This involves carefully selecting financially stable and dependable suppliers capable of delivering quality materials on time. This ensures the project's fulfilment and makes the property operational in the estimated time.

7. Effective planning: Proper planning is essential whether the investor funds the development of a property from the ground up or the acquisition of a preexisting one. In some cities, developers propose restoring old office buildings and heritage structures. While this approach has benefits of its own, the redevelopment sites may encounter more challenges, such as council permits and local resistance. Repurposed assets might also need extensive upgrades to meet environmental and safety standards.

8. Effective communication with authorities: From an investor's standpoint, fostering efficient and ongoing communication with authorities is vital. This strategic approach can serve as a preventive measure, helping to mitigate unforeseen costs that may arise from adjustments like increasing units or adding extra floors to the property. Additionally, ensuring an ample staff resource pool is essential for meeting compliance rules and keeping employees well-informed about evolving obligations. Furthermore, investors should also ensure that the partner PMGs and developers possess adequate staff resources aligned with compliance norms and consistent training for efficient PBSA property development.

‍How to Make PBSA Portfolio Stand Out?

‍Several factors differentiate PBSAs from other student property types. However, with high competition in the market, there are certain unique selling points one can incorporate into a PBSA portfolio to make it stand out from other accommodations in the student housing industry:

1. Strategic business & brand collaborations: In most purpose built accommodations, the inclusive on-site amenities are a major advantage for residents. However, PMGs and operators can enhance their appeal by strategically collaborating with popular restaurants, entertainment hubs and nearby universities in city-centric locations. For instance, partnerships with nearby cafes, sports clubs, and gyms for discounted or free memberships for residents add a major plus point to any property. This not only capitalises on local resources but also allows more room for innovation.

2. Pricing strategies: Apart from monitoring the average student housing costs, there needs to be a focus on understanding pricing trends in nearby PBSA real estate units to target various student groups. For example, if the property is near a prestigious university with higher fees, it can attract young adults with greater rent-paying capacities.

3. Regular maintenance: To keep the property well-maintained and appeal to the target audience, it is crucial to evaluate current and past costs for statutory, planned, and reactive maintenance, including ground maintenance. Whether maintenance is handled by in-house  or third-party contractors, operators need to maintain a regular log for insights into recurring issues. It’s also advisable to monitor product lifespan for items like taps, handles, or fans to prepare for replacements and minimise unexpected expenses.

4. Tenant feedback: Tapping into occupant feedback is an often overlooked yet powerful tool. Online reviews can reveal valuable insights, potentially influencing property management decisions. Beyond surveys, engaging with existing tenants during inspections is useful for uncovering details on their experiences, recurring issues, and management niggles-critical factors in property purchase decisions. Employing a skilled team for thorough assessments is the key to a thriving portfolio, especially for PBSA assets.

5. Contents insurance: Insurance for the building and its contents is essential, with many operators now incorporating contents insurance for student renters. It's crucial to assess if the current policy meets the required standards and if there's room to negotiate for reduced premiums or consider alternative insurers.

6. Technology integration: From streamlined communication platforms for residents to advanced data analytics for predictive maintenance, technology is rapidly becoming integral to property management. By adopting innovative solutions like virtual tours and management software, property managers can enhance operational efficiency and ensure tenant satisfaction.

7. Brand positioning & marketing: High occupancy rates require effective marketing campaigns. Cultivating and maintaining a brand image that appeals to student demographics in different regions is necessary, and that includes leveraging social media platforms like Instagram, TikTok, and more. Providing detailed information optimised for several media channels is key to increasing visibility and accelerating marketing efforts.

8. Diverse staff: A diverse property management staff enriches tenant experience, bringing together a range of perspectives, cultural understanding, and language proficiency. This further fosters inclusivity, open communication and support, catering to the unique needs of international students. Cultural sensitivity in the team promotes healthy cross-cultural exchanges and addresses diverse challenges, creating a harmonious experience for all residents.

9. Community social calendars: Properties that connect with student tenants through community partnerships and social events can successfully foster a sense of belonging by curating a better university experience for them. Not only does this create ties with businesses in the neighbourhood, but it also helps young adults enhance their relationships with university peers and educational institutions.

10. Sustainability: In recent times, eco-friendly accommodations in the same rent bracket are preferred over non-green options. Sustainable buildings might come with a 'green premium,' but their durability extends beyond other developments, even if the returns aren't immediate. Additionally, tenants satisfied with sustainable living help to improve word-of-mouth marketing for PMGs, leading to higher occupancy rates.

What Legal Requirements Govern PBSAs?

‍PBSA is a niche in the student accommodation industry that operates under different regulations in each country and state. The following sections highlight the legal requirements for student accommodations that also apply to the PBSA real estate sector that every operator or investor should be aware of:

Legal Requirements in the UK

• Planning and zoning requirements: Every responsible PBSA real estate operator or investor must ensure that their property complies with the local planning and zoning norms, such as adhering to the regulations set by local authorities, including the City of London Corporation, Westminster City Council, or Manchester City Council. For example, the Biodiversity Net Gain (BNG) Bill in the UK mandates developers to ensure that any project they undertake results in a net gain in biodiversity.
• Lease and ownership agreements: The investors and developers should confirm that they have valid legal status and the authority to lease or own the land on which they are building their property.
• Building regulations: PBSA real estate operators and investors must comply with national building regulations and ensure compliance with energy efficiency standards, fire safety regulations, accessibility requirements, and health and safety restrictions.
• Tax laws: Adhering to the stamp duty land tax, corporation tax, and capital gains tax is necessary to avoid hassles in the long run.
• The Housing Act 2004: This law classifies housing alternatives and sets health and safety requirements through the "Housing Health and Safety Rating System (HHSRS)". By making homes safer and healthier, it helps local authorities in the UK to identify and address health and safety risks in residential properties.
• Code of practice for the management of student housing: This law aims to support the maintenance of housing standards for student accommodation in the UK. It sets out the expected standards for rental properties and establishes a complaints procedure in the event of any deficiencies.
• Code of standards for larger residential developments, 2022: This code sets out guidelines for the management of university-managed housing, including rules for purpose built student accommodation in universities. The Code seeks to ensure openness and an efficient framework in the transactional link between educational establishments and full-time students (who act as landlords and tenants). The code requires a formal Fire Risk Assessment (FRA) policy that adheres to British Standards for escape routes, emergency lighting systems, doors, and fire extinguishers.

Legal Requirements in the USA and Canada

• Zoning laws: Developers must check the zoning laws to ensure that their building adheres to the land use regulations and parking requirements. Further, checking the local zoning regulations helps understand if a particular establishment is suitable for student accommodation. For instance, there are several municipal or county zoning authorities in the US like LA County Planning, New York City Council, etc.
• Building and licensing regulations: Every PBSA property in the USA must comply with state and municipal building codes to ensure accessibility and safety. Developers should also be aware that some states or localities may require special permits for rental homes.
• Fair housing laws: Discrimination in housing based on race, colour, religion, gender, national origin, physical or mental disability, or marital status (family with children) is illegal under the Fair Housing Laws.
• Residential Tenancies Act: This Act sets rules that govern rent increases, evictions, repairs, and other issues that affect tenants in Canada.

Legal Requirements in Australia

• Residential Tenancies Act: The RTA oversees the PBSA real estate regulations and rules that govern major issues affecting tenants in Australia.
• Decision makers: The Student Accommodation Council is a newly formed Division of the Property Council, specifically created to represent and advocate for Australia’s Purpose Built Student Accommodation sector.
• Building and planning approvals: Depending on the nature of the project, including any construction or renovations, one might need to obtain building and planning approvals from your local council.
• Fire safety: Ensure that a PBSA property adheres to strict fire safety regulations, including installing smoke detectors, fire extinguishers, and emergency exits. Consulting with the local fire authority comes in handy during such circumstances.
• Building codes: A purpose built student accommodation must comply with all relevant building codes, which cover structural integrity, energy efficiency, and other aspects.
• Educational act: When affiliated, universities and other educational institutions may oversee student accommodation facilities/properties on a state or territory level.
• Consumer protection law: General consumer norms may also apply to PBSA to ensure student accommodation providers adhere to ethical business practices and safety regulations.

What Are the Challenges in PBSA Sector and How to Solve Them?

‍The requirement for PBSA real estate continues to increase every year, but property investors face many strategic, operational, and development challenges. Here are the key challenges faced by investors and their strategic solutions to grow in this dynamic market.

1. Dynamic price changes

• Challenge: Constant fluctuations in prices due to market changes pose a challenge, requiring PBSA property managers to adapt to unpredictable changes to maintain a competitive edge.
• Solution: Implementing dynamic pricing strategies that consider market trends, demand fluctuations, and competitor pricing will help the operators stay competitive. Operators can collaborate with companies like amber, who can help them strategize dynamic pricing based on real-time data.

2. Last-minute booking cancellations

• Challenge: The uncertainty of last-minute booking cancellations creates a challenging situation for managing and sustaining occupancy rates.
• Solution: Develop booking deposit policies and flexible reservation policies that allow for last-minute changes without significantly impacting revenue. Doing timely checks with students and communicating with them can help them to minimize cancellations.

3. Student preferences

• Challenge: Gen-Z's changing accommodation preferences present a challenge, requiring continuous efforts to stay attuned to changing trends and adapt the property to meet the dynamic preferences of the student population.
• Solution: Conducting regular surveys and market research to understand can make them build their strategy as per the tenant preferences. Investing in adaptable property designs and amenities, especially those promoting environmental consciousness, is essential for staying relevant in student accommodation.

4. Market volatility

• Challenge:  The uncertain nature of the market poses a significant business challenge, as sudden shifts in demand, economic conditions, government policies, or competition can impact the feasibility and success of PBSA portfolio .
• Solution: Diversifying the portfolio can reduce reliance on specific student source markets and reduce the impact of market fluctuations. Overcoming these challenges requires financial planning, including carefully managing resources, assessing risk, and effectively implementing policies to ensure the long-term sustainability of the PBSA real estate business.

5. Development hurdles

• Challenge: Zoning regulations affect the type of student housing that can be built and operated in specific areas. Investors need to work with local authorities and adhere to zoning rules for smooth operations.
• Solution: Understanding the zoning regulation with the help of a legal expert can effectively eliminate the issues. Collaborating with local communities to address concerns and build support for PBSA projects ensures a smoother approval process.

6. Supply-demand dynamic

• Challenge: The challenge in PBSA real estate investment lies in managing the balance between the fluctuating demand from tenants and the supply of student accommodation. This imbalance is caused by a lack of market research, the unpredictability of university enrollment, and economic factors.
• Solution:  To address these challenges, PBSA real estate investors need to do strategic planning and research about the location, region, student enrollment pattern, and financial factors. Proper research and collaboration with universities can help identify key areas for growth opportunities.

What's Next for the PBSA Sector?

PBSA real estate emerges as a robust and promising investment avenue within the real estate sphere. This sector has emerged as a lucrative avenue for investment, observing a 7.7% YoY total return. By understanding its core principles, diverse property types, and future trajectories, investors can gain the necessary expertise to engage with this dynamic sector effectively.

As property operations get enhanced with technology and AI in student housing, purpose built student accommodation sector will continue to showcase immense growth. With the rapid expansion of the higher education sector, property operators can leverage global demand generation for student housing by listing their portfolio with amber. The PBSA real estate sector remains poised as a resilient premium asset, ensuring high rental returns in the upcoming years.