Rise of the BTR in the Student Housing Market

The student housing market has come a long way from cramped dorm rooms and traditional apartments to Purpose-Built Student Accommodation, and amidst all this development, built to rent or build to rent (BTR) student housing has emerged as a revolutionary concept within the vast realm of student accommodations. Its importance is on the rise as it is becoming more student-centric and offers a glimpse into the future of student living.

This blog aims to explore some important parameters contributing to the growth of the BTR properties in the student housing market. So, let’s understand the nature, opportunities, and challenges of this market.

How is Built to Rent Gaining Pace in the Student Housing Market?

In an era where pursuing higher education has a significant cost attached to it, students try to balance their finances with affordable student beds, which can provide them with comfortable living spaces and also do not get too expensive as per their budget. Some of the factors that played a major role in the rise of the built to rent sector are:

1. Affordability: One of the primary attractions of build-to-rent student housing is its affordability. Many students struggle with the financial burden of education, and BTR offers a cost-effective solution. With flexible rent payments and transparent pricing structures, built-to-rent ensures that quality housing remains accessible to students, helping them alleviate their financial strain.
2. High-Quality Amenities: BTR developments prioritize high-quality amenities that enhance the overall student experience. From fully furnished bedrooms to large swimming pools, BTR properties offer a range of modern amenities. With concierge services, digital key access, etc., these amenities make students’ day-to-day lives easy and provide them with a sense of well-being that is unmatched in conventional student accommodations. This is ultimately contributing to the growth of built-to-rent student housing.
3. Flexibility: The dynamic nature of modern student life requires flexibility in housing arrangements. Build to rent recognizes this need by offering flexible lease terms and frequently providing fully furnished units. This adaptability empowers students to focus on their academic pursuits and personal growth without being burdened by the challenges of moving in and out of housing every semester.

Growing Demand for Student Housing with Increasing HE Enrollments

The student housing market has been witnessing a steady demand due to increasing higher education enrolments and other important factors. Here are a few:

1. Factors Contributing to the Increasing Demand: Several factors contribute to the steady growth in demand for student housing. Rising enrollment in universities, the influx of international students, and a heightened awareness of the critical role comfortable living plays in academic success all drive the need for quality student housing. According to the Amber Student Housing Partners Report, “1 Billion additional post-secondary graduates over the next 30 years will be joining the pipeline, out of which 75% are from Asia and Africa, and many will be seeking an English-based degree or credential.”
2. Challenges Faced by Students: Students often face many challenges when searching for suitable accommodation. Issues such as unaffordability, suboptimal proximity to amenities, and inadequate maintenance are common complaints associated with many student housing options. Such challenges can significantly impact a student’s overall quality of life during their academic journey.
3. How BTR Addresses Student Needs: The built to rent sector is observing that students are showing keen interest in considering it as an affordable student housing option. So, while the BTR market is evolving and developing to effectively cater to the student demographic, it also addresses market challenges by offering living spaces tailored to modern students' requirements. By strategically locating developments near major universities, public transportation, and essential amenities, build to rent ensures that students can live comfortably and conveniently, enhancing their overall quality of life.

Future Prospects of the Build to Rent Category in Student Housing

The built to rent sector, especially in the student housing market, has been showcasing growth prospects in the upcoming years. This growth has been flued by multiple factors like student demand and supply gap, a low number of PBSA construction projects in the pipeline, and many more. Here are some factors highlighting a bright future for built to rent in student housing:

1. Successful BTR Student Housing Developments: Numerous built to rent projects have successfully catered to the needs of students across various locations. According to a Savills report, the UK housing market presently has 88,100 completed build to rent homes, with an additional 53,500 under construction. Furthermore, 111,800 residences, including those in the pre-application stage, are in the planning pipeline resulting in the sector's overall size currently standing at 253,400 houses.

The most common set of tenants in the built to rent sector is turning out students in the UK and the numbers are growing exponentially. Gradually, these developments have improved student living conditions and also observed impressive occupancy rates as mentioned below:

2. Impact on Students and the Market: The expansion of the built to rent sector has led to a change in mindset towards the issue of valuing this type of asset. The BTR developments have positively impacted students' overall well-being. They have set a benchmark for other housing providers, raising the standards of student accommodation. Investors have also witnessed stable returns, attracting more capital into the build to rent sector making it a high-return investment plan.

Student housing developers challenge multifamily developers by presenting themselves as major participants in the built to rent market, seeking to surpass every competitor. Some of the biggest student housing developers such as Harrison Street, Core Spaces, and Unite Students have been observed making moves to tap into the BTR market and expand their portfolios.

3. Continued Growth and Innovation: The built to rent sector has been observed to exhibit exponential growth. Developers are continually innovating to meet the dynamic needs of students by integrating smart technologies and sustainability features into their projects. This growth presents an exciting opportunity for property owners and investors. Build-to-rent developments drive to increase sustainability across the sector and this is also one of the primary reasons that investors are heavily investing in the built-to-rent sector, considering it as the future.

4. Tackling Potential Challenges: As BTR properties serve a vast audience and are growing at a voluptuous rate, there are some underlying issues that exist. Some of these concerns like the following can also pose a hurdle to its rapid growth and development:

• There can be situations, where tenants living under the same roof might not get along well because of their different backgrounds and that might come out as a clash between tenants, creating havoc in the neighbourhood.
• While flexibility is a built to rent advantage, it can also lead to higher tenant turnover. Frequent turnovers can result in increased administrative costs, and more wear and tear on the property, making it expensive to maintain. Therefore, implementing effective tenant retention strategies and minimizing turnover rates are important considerations.
• There is a chance of oversaturation in its market as BTR gains popularity. A rise in BTR properties could result in more competition, which might result in lower rental rates and have an effect on the success of current build to rent projects. To address this issue, market analysis and strategic location decisions become crucial.

Conclusion

Built to rent (BTR) sector marks a significant advancement in student accommodations. It offers cost-effective solutions, fosters a sense of community, and adapts to the dynamic nature of modern student life. The relentless demand for student housing market, driven by rising enrollments and the importance of comfortable living, is effectively addressed by BTR.

Living spaces strategically located near universities and essential amenities enhance students' overall quality of life during their academic journey. Looking ahead, the BTR sector's promising future includes impressive occupancy rates, raised standards in student accommodations, and attracting investments due to its stable returns and commitment to sustainability. In the long run, the built to rent sector is a key player in shaping the future of student housing. If you have a BTR property for student housing, then list your property with amber to optimise revenue streams and expand your portfolio!

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