Alternative Residential Conference 2018: Part One
I had a very interesting day at the recent Alternative Residential Conference 2018, which covered all aspects of this sector. Alternative residential is defined as any managed assets which provide somewhere to live, across a range of demographic groups; including Purpose Built Student Accommodation, Build to Rent (BTR), Co-Living, Retirement Living, Hotels and Serviced Apartments.
There was simply too much information to write a full summary, but there were a number of areas where I could draw upon both my personal and professional experiences over the last 20 years.
Pricing strategies in the Student Accommodation market over the past 10 years reflect that as quality and choice increases, so too does price. Whilst some of this is due to the larger international student contingent in many universities, there has also been an element of “build it and they will come” where the bar has been gradually raised over many years, with all students now demanding a better quality product and service. This is certainly reflected in the student accommodation projects we are working on, and it does remind me of the £40 per week private halls and terraced houses I lived in during my time at University in the late 1990’s and early 2000’s. The student market is constantly described as being saturated, but one of our clients who I had a conversation with over lunch summarised it nicely when he said “…the first time that was mentioned in one of our board meetings was in 2003, and we’ve done pretty well over the intervening 15 years…”.
The part of the debate which resonated most strongly with me regarded the move from University to our first properties after graduation. I was lucky enough to catch the beginning of the journey to higher quality student accommodation in my final year, with the first iteration of communal facilities including concierge, laundrette, and security. But when we graduated, we were expected to downgrade significantly into the rental market, with no real choice and certainly no managed services. This is the void which is now being filled by the Build to Rent Sector, which has been a major growth area for both Curtins and the wider industry. Whilst it feels like this has been around for a few years, it’s still a relatively new market. There was much debate around levels of specification, target demographics and requirements for communal facilities, and this mirrors conversations in our offices here at Curtins regarding design of the c10,000 units of BTR we have at varying stages, particularly in Birmingham, Manchester, Liverpool, Leeds, London and Sheffield. My favourite quote of the day came from one of the traditional Registered Providers who are entering the market with a major new fund, who said that their communal facilities “do not promote Club 18-30 forced fun but create an environment for residents to be as involved as they wish.”
The key challenge for all developers is identifying the right sites, in the right locations. Even within cities, there are areas that work for BTR and areas that don’t, and these differences are even more pronounced across regions. One of the speakers explained that their dilemma is a “Goldilocks” perspective of “not too hot and not too cold.” Land prices, rental levels, and build cost all contribute to the formula which the institutional investors look for in their investment decisions. The very positive conclusion was that BTR is here to stay, with various statistics and trends showing that Institutional Investors remain bullish about the sector. In fact, it is already evolving and the general feeling was that it will increase significantly to include more schemes outside of city centres, following trends already well developed in the USA and Canada.
And all this was before lunch!
The morning session was very encouraging for our business. We have a very resilient business model which covers all areas of the public and private sectors, but it is hard to deny that student residential and BTR are two of our main areas of work. The positivity in the room regarding these sectors was very encouraging, and bodes well for Curtins, our clients, and other designers and contractors active in these areas.