Student accommodation has been at the forefront of some tough changes throughout Covid-19.
As many universities adopted a virtual learning environment, students looked to retreat (where possible) to their family homes for the sake of saving money and being close to the ones they love – but what does this mean for the student accommodation sector now that life is seemingly returning to normal, and has this affected investment opportunities?
We spoke with Richard Ward, Head of Research at StuRents, the UK’s leading student ecosystem – home to the UK’s largest search platform and a leading provider of both data and property management software.
Ahead of The Global Student Housing Conference 2022, we talked to Richard about the changing landscape of the student accommodation market for PBSAs and HMOs, namely the challenges to come surrounding increased expectations of student amenities, concerns about affordability and localised demand.
What does the student housing market look like right now?
Recent surveys (including data from UCAS) have yet again shown that value for money is the top concern for students in the process of choosing accommodation. Reflecting similar industry surveys, StuRent’s own data indicates that the cost of accommodation is the number one concern for students when it comes to reviewing accommodation choices.
The issue of affordability will only grow in importance and is bound to remain the case for the foreseeable future as energy bills continue to rise and councils across the UK continue to implement Article 4 directions, making it harder for landlords to establish HMOs without appropriate planning in place.
While there was a clear reason for concern at the height of the pandemic – Richard confirmed that we are set to see record demand for HMOs following domestic student growth in the UK.
In addition to this, Richard highlighted that despite PBSAs being hit the hardest by the pandemic, signs of year-on-year growth in demand for PBSAs still exist. It is, however, worth noting that this relies on international travel bans being lifted with full effect ahead of the 2023 term commencement.
What are the upcoming challenges for PBSAs?
With domestic demand on the rise, Richard notes that a big challenge for PBSAs will be centred around affordability.
An incredibly important factor in the growth of the student housing sector, affordability is becoming increasingly important to students looking for accommodation during their studies.
While PBSAs are well equipped to provide all of the expected amenities, expectations will continue to grow alongside demand for reasonably priced accommodation options.
With the average cost of PBSA consuming the majority of the average maintenance loan and domestic demand on the rise, there will be even more pressure on the sector to provide a range of price points whilst offering the amenities students have come to expect.
Another challenge will remain in the rise of the HMO market. While HMOs will likely struggle to keep up with the growing demand for available amenities, the dramatic price difference will, in most cases, sway students, especially those in higher years of education to go for the more affordable option.
Despite the relatively high price tags, as university application numbers continue to climb, we are sure to see an increase in demand for PBSA options, putting pressure on the infrastructure of some university towns and cities that simply do not have the available sites for PBSA expansion.
Are there any upcoming challenges for HMOs?
Will the rise in energy bills affect how attractive HMOs look in the long term?
“HMOs may need to increase their rents – especially when offering bills-inclusive contracts. Short term, the biggest risk is to the landlords of HMOs who will, in most cases, have to front the cost of bill increases to those properties offered as bill-inclusive packages.
Next season we will likely see the impact come more to the fore, although it is expected to be a mixed bag and will vary depending on the risk exposure of each landlord.
That being said, this isn’t an issue exclusive to HMOs, as PBSAs will undoubtedly need to review how the risk will be managed to negate and offset additional costs.
Another potential challenge will be centred around the aforementioned increasing desire for modern amenities. Despite HMOs being popular among mostly second and third-year students, there is a significant gap between the amenities offered by HMOs compared to PBSA.
What university towns and cities are ‘ones to watch’ this year?
Richard confirmed that investor demand is usually centred around the more prestigious institutions, and the latest data does show increasing demand for student accommodation in locations such as Exeter, Durham, Edinburgh, Liverpool and Bristol.
Demand growth will likely be strongest at those institutions that can offer students the best quality in terms of education, career prospects and higher education experience.
Richard notes that Nottingham has seen a flurry of planning application activity off the back of recent demand growth with more than 11,000 beds now in the pipeline. This represents the largest supply pipeline outside of London. The big question will be whether Nottingham can take that amount of new stock…
To learn more about the future of student housing and its PBSA and HMO markets, book tickets to attend our upcoming Global Student Housing Conference on 11th May.
Moving to university is an exciting time for many, with the opportunity to gain independence and a real view of what life is like in the big wide world.
University enrolment certainly took a hit at the beginning of the pandemic, and this has of course had a knock-on effect on those living in university accommodation. Despite this, UCAS reported a 10% increase in university enrolment in 2021, with some universities even offering additional spaces on high-demand courses. So, what does this mean for the student housing market?
Where is the student housing market now?
Students typically have a few choices of accommodation when moving away for university in the UK. Halls of residence (PBSA) are a popular choice, offering the opportunity to meet new people on similar courses with shared interests. Another popular option is to look for housing in the private rental sector, however, this is less popular with first-year students on the basis that it is often harder to connect with other students prior to term starting.
Though there are added benefits in the additional security of living in purpose-built student accommodation, it is not the cheapest option and there are only so many spaces available. This being said, with the recent uptake in university admissions we can certainly expect to see some big changes in the student housing property sector in the near future.
What changes can we expect from the student housing market this year?
A rise in costs – As energy costs are due to surge in April, along with many other living costs, students will undoubtedly be worrying about the knock-on effect on university accommodation prices. Over recent years there has been a steady increase in student housing costs; reaching an average of £7,347 a year, accommodation alone has now overtaken the average student maintenance loan (£6,900).
As a number of industries recover from the aftermath of the pandemic, there are also associated recovery costs. Modifications to student housing developments for improved safety will also increase the overall investments required to bring developments to fruition. While university admissions continue to rise, the competitiveness of student housing will likely increase, meaning there is little option for students but to find a way to subsidise the increase through part-time jobs alongside study. This will, however, ensure that all new safety precautions are taken on board and prioritise creating healthy living spaces for new students.
A large part of this change is due to cost-cutting from education providers. By refocusing their aims on quality of education and research, they have released public provisions to the private sector which in return will serve higher price-points and subsequently higher rents.
Increased health and safety considerations – While university education continues to soar in popularity among the newest generation of school and college leavers, there is an increased demand for high-quality university accommodation.
Purpose-built city-centre locations are extremely popular among students and often a profitable investment for developers because of the peak in demand, however, the risks associated with such buildings are high and so fire safety and general health and safety are high on the agenda.
Fire safety dictates that all communal areas should be checked regularly to ensure smoke detectors and fire extinguishers are functional, as well as ensuring emergency lighting is checked and serviced. Fire doors must comply with FD30s requirements and industry bodies are calling for all PBSA’s to be fitted with sprinkler systems following the Grenfell tragedy.
Other health and safety measures include the vetting of all associated contractors to ensure competency when dealing with inspections and reporting procedures, something that we anticipate will remain at the forefront of PBSA requirements for years to come.
Newly designed collaborative spaces – As well as an increased desire for collaborative spaces for students, there is also an increased desire for privacy. The pandemic has simultaneously driven change for both ends of the spectrum and ultimately encouraged developers to take more responsibility for the opportunities they’re providing residents with to prioritise their health and wellbeing within the bounds of their PBSA.
We anticipate that as a result of this we will see modifications to the designs of PBSA’s to include additional measures for social distancing, such as an increased number of single bedrooms, extra space in double bedrooms and en-suite inclusions.
Prioritised digital transitions – As the student population grows, the landscape of student journeys changes dramatically.
Undoubtedly fast-tracked by the pandemic, online education has risen in popularity and with it comes the demand for increased flexibility from student housing providers. Accommodating the ever-changing expectations of residents with both long and short term lets has been an imperative move to the success of PBSA’s and even privatised student housing. The outcome of this increased flexibility is yet to be understood, but it is thought that this will be a beneficial move in conjunction with improved student accommodation options and safety measures.
Want to learn more?
The 13th annual Global Student Housing Conference 2022 is being held in London on Wednesday the 11th of May, which will bring together experts across Student Accommodation Property sectors. With an in-depth look into the impact of COVID-19 on student housing globally and a deep dive into the opportunities within the sector in the UK and beyond.
Source list –
The future of PBSA: its investment and growth opportunities – PBSA News
10 Student Housing Trends for 2022/2023: Technology, Transport & Privacy – Financesonline.com
Savills | Spotlight: European Student Housing – Forever Young
Investors turn to student housing as in-person learning returns (jll.co.uk)
Why Europe’s student housing sector is on a learning curve (jll.co.uk)
Environmental, social, governance. Three words that are changing the face of the property sector, raising standards and defining the impact of business investment. But what does it mean for property professionals that are designing, constructing or managing private properties in the rental sector?
With the built environment being one of the largest energy consumers in Europe, making up 40 per cent of total energy consumption and 36 per cent of CO2 emissions, the relevance of ESG for the property sector is climbing public and political agendas quicker than ever.
What is ESG?
Environmental, social and governance are three factors being used to determine the impact and performance of housebuilding and management. Environmental takes materials, waste management and resources into consideration, whilst social impact focuses more on safety, health and wellbeing and community relations. Governance covers company culture, diversity, and reputation, with a focus on minimising investor risk.
With strong ESG strategies in place, investors can be assured that their investment is actively improving outcomes in local and global communities. Gone are the days of focusing on financial reward, the rise of ESG funds is prioritising investments that deliver against more than their bottom line.
What does this mean?
Whether you’re a landlord, developer, housing association, or working within the construction sector, there are several areas to consider. With new legislation coming into play, practices need to be reviewed to ensure that organisations are meeting the demands of occupiers in the future. The UK Government’s strategy and investment plan to move toward Net Zero 2050 is a large driver of this covering sectors such as power, transport, natural resources and waste.
The Heat and Buildings Strategy was also announced placing a focus on the decarbonisation of heat in buildings. Within this, a minimum energy efficiency standard for domestic PRS properties of EPC C by 2028 was confirmed, as well as the implementation of a performance-based energy rating for commercial buildings starting with pilots next year.
What opportunities can this bring?
With new legislation focusing on areas like health and wellbeing, diversity and social impact, there is no doubt that it will in time change the private rental market. The next wave of renters and homebuyers are also driving this forward with Gen Z cited as the emerging sustainability generation who focus on the provenance of what they’re buying, the story behind it, and the impact it has on the environment around them. By building spaces that promote healthy, active social lifestyles and flexible working, the residential market can capture tomorrow’s occupiers whilst also setting the bar for environmentally aware buildings.
Interested to learn more?
The Inaugural UK Residential ESG & Sustainability Conference is being held in London on Thursday 5 May which will bring together experts across the residential markets and its subsectors. The event will focus on understanding what this means, how to implement practical changes, the relevant legislation that’s being put in place and importantly, how ESG can be measured. There will also be discussions around achieving zero carbon homes, the changing workforce and how organisations can mitigate risks and futureproof their businesses.
The full agenda can be found here where there is also information about how to book a place.
2021 was a year like no other. Not only have the property and development industries been hit by a pandemic but almost every other industry under the sun has suffered on a global scale.
We were forced to slow down, rethink and refine our approach to the way in which our industry can survive and grow. Developing resilience and adapting quickly is essential to growth, with or without a pandemic.
With an increased focus on sustainability, there is fresh hope for delivering developments that not only meet current needs but are future-proofed for the next generation (and beyond).
An example of post-covid development change was discussed in our recent post Care homes after COVID-19.
Electric vehicles
Over the years we have seen a rise in the use of electric cars. Alongside their growth, we have witnessed design and urban development slowly becoming shaped by electric vehicle ownership and subsequent storage.
As the needs of homeowners have changed, and we look to accommodate extra living space, vehicles have slowly been moving back to the roads. What does this mean for the impending shift from fuel-driven vehicles to those that require electric charging points to get you from A to B?
Prime Minister, Boris Johnson, is set to announce that all new homes and buildings in England will be required to install electric vehicle charging points from 2022.
The laws will also affect new-build offices, supermarkets and buildings with ‘major renovations’ taking place.
The law changes are in an effort to ‘adapt our economy to the green industrial revolution’ as we approach the 2030 deadline which the UK government has set out a target to ban new petrol and diesel car sales.
However, issues have already been highlighted stating that there is a monstrous geographical divide, with London and the South East currently hosting more car charging points than the rest of England and Wales combined.
Criticism has also risen around the affordability of electric vehicles for middle-class families, in addition to the lack of signatures on the COP 26 summit pledge for zero-emissions cars and vans by 2035, by four of the world’s biggest carmakers.
Some of the biggest concerns surround the overall lack of infrastructure for such changes and the looming question ‘do we have grids that will support this level of electricity consumption?’ remains unanswered.
What do you think about the sustainability of electric vehicles? Tweet us @LDEProperty
Embodied energy
Life cycles of properties are a hugely important part of environmental sustainability assessments.
The embodied energy of a building covers the life cycle of the property, from the energy used in the manufacturing of materials, transportation, construction and maintenance to the eventual removal/disposal or recycling of materials and restoration of the site at the end of its life.
Brighton was the UK’s first ‘one planet’ city, requiring developers to submit carbon plans with their planning permission applications. The sustainability of our developments in the UK could be drastically improved if all authorities enforced measures of sustainability in future development plan submissions.
Read more about the five most popular eco-housing concepts in 2020.
Sustainability is a wide-stretching issue in many parts of the UK, not just in the property and development sector. By implementing changes there is a chance to increase the quality of the products we are manufacturing and lessen the environmental impact they make.
What is your take on sustainability in the development industry and how would you feel about the introduction of a carbon plan report to all major developments? Let us know on Twitter @LDEProperty
Numerous unanswered questions in the Planning and Viability sectors leave us questioning what the future of development will look like.
We talk to Andy Leahy, Managing Director at Bespoke Property Consultants, ahead of his guest spot as a Viability Expert at our upcoming 14th Annual Planning & Viability Conference.
The conference will cover developments in viability guidance, the evolution of viability on a practical level, and the challenges the industry is facing in the aftermath of government changes to planning policies.
An industry update
Viability is essential to the successful delivery of developments, not just across the country, but the world.
Understanding development plans to ensure policies are realistic and deliverable is a proven tactic to keep projects on schedule and on budget.
Andy confirms: “In recent times, the government’s changes to planning policies have left the industry unsure of what the future of viability looks like in planning, particularly when it comes to the delivery of affordable housing under the Section 106 agreement.”
The hybridisation of this agreement and CIL has sparked industry-wide confusion over the deliverable aspects of pooled contributions, meaning that each Developer will likely have a different interpretation of the S.106 expectations and that ultimately on some developments they may be missing delivery objectives.
Challenges to viability
In addition to the confusion surrounding planning policy changes, additional fire precautions and cladding investigations have overtaken the delivery of affordable housing plots on numerous sites countrywide as a priority. This highlights several issues to do with future values of affordable housing and hence viability across developments and the ripple effects that this can have on the industry.
Meanwhile, the National Planning Policy Framework (revised in July 2021) outlined by the government dictates that First Homes must be introduced on each development, however, the arrangement for such deliveries is complicated. With low-cost homeownership on each site still needing to make up 10% of the overall development, and First Homes taking up the first 25% of Affordable Housing it is unclear how the transition from shared ownership to the priority delivery of First Homes as a priority will take place, with little to no guidance available.
Andy said: “One big question still looms; Will First Homes see the end of Shared Ownership?”
In addition, the new model for Shared Ownership was set out by Homes England in April 2021 and inadvertently increases viability risks for housing associations delivering shared ownership properties following the government’s new preference for First Homes.
All this and more will be discussed in the 14th Annual Planning & Viability Conference. Book now to secure your place.
Build to Rent (BTR) has been around for several years, so how does it help meet local housing needs?
A concept originally introduced in 2012 as part of the legacy programme for the Olympic Games, BTR saw the transformation of Stratford’s East Village from athlete accommodation, to privately owned rental developments.
Meeting local housing needs is a priority to several government organisations across the country, and BTR caters to this with property development strategies that are designed with the sole intention of appealing to the rental market, as opposed to long-term homeownership.
Several large developments have followed in the footsteps of the East Village development and thousands of new rental properties have been created, many of which have been backed by numerous government schemes to maximise housing opportunities.
Rental growth opportunities have seen the BTR sector benefit from a changing attitude towards rented accommodation.
In addition to a lack of affordable properties for sale, the improved quality of lettings and the lifestyle available to those renting, has reinforced an open-minded attitude to BTR properties.
How are BTR properties different?
Renters are often a second thought, after buyers. Developers have recognised that to attract the right audience to renting, the lifestyle must align with their wants and needs in a way that seemingly outweighs the prospect of owning a property.
By introducing modern designs, communal areas and, in some cases, built-in gyms, BTR developers can offer an elevated lifestyle to renters that is more attractive than buying, especially among younger demographics.
Aside from offering an attractive lifestyle to prospective renters, BTR contributes enormously to the meeting of local housing needs through the government BTR guidelines, published in September 2018.
The Governments support for BTR
The National Planning Policy Framework suggests that local planning authorities should conduct assessments of local housing needs based on demographic data, to ensure that if a need is identified, the authorities would promote and encourage developments that include BTR properties in their strategy.
This also accounts for affordable housing with new BTR schemes making up 20% of available properties in new developments.
With this demand in mind, BTR is seemingly a great investment to make. Rental returns on desirable properties are steady and reliable as a rule.
Challenges to BTR schemes have seen the legitimacy of separate ownership sell-offs called into question. However, government guidance states that:
“The sale of a build to rent scheme or the sale of individual homes within the scheme to other tenures, should not result in the withdrawal of the affordable housing contribution from the local community.”
Is BTR the most effective way of meeting local housing needs?
BTR makes positive contributions to the housing crisis, enabling local governments to meet housing needs for individuals across the UK. As a worthwhile development investment, BTR continues to deliver affordable solutions that don’t result in the tenant compromising their desired lifestyle.
Although BTR is proving to be one of the most successful schemes within the housing sector, there are undoubtedly still challenges to the schemes. Not all BTR developments are governed by affordability schemes, meaning that some developments can be particularly inflated in price.
However, even those that are covered by the affordability factor are required to be owned or managed by a third party, something that can substantially dilute the efficiencies of building management and subsequently impact the investment value.
There are likely to be several developments to the BTR scheme, especially in line with the government’s affordability targets.
We want to hear what you think about Build to Rent. Would you invest?
Book your place at our Resi Investment & Build to Rent 2021 conference to find out more.
Care homes’ reports have demonstrated a steady rise in care homes investment following the COVID-19 pandemic.
An institutional rebalancing survey conducted by BlackRock in 2020 has confirmed that 41% of investors announced plans to increase and diversify their global property portfolios.
Since the start of the COVID-19 pandemic, there has been increased insecurity surrounding the more traditional property sectors. This uncertainty is especially pronounced for investors whose property portfolios boast numerous office and retail spaces, that have, of course, been some of the hardest-hit sectors throughout the course of the pandemic.
This dramatic shift in mainstream investment opportunities has pushed property investors to rethink their previously secure investments and look to something with a bit more dependability.
Overlooked because of stigmas surrounding short-term rental investments, care homes and residential developments have since become a hot spot for guaranteed cash flow.
Here we take a look at the sector to determine whether these developments are still a worthwhile investment.
Throughout the course of the pandemic, care homes have naturally been a focus, as a large majority of individuals most affected have been those living in care homes, and the stories surrounding the way these residencies have been run has been frequently put into question.
Carterwood reports that the COVID-19 pandemic has had an impact on the care home sector, with an indication of a significant rise and fall in care home openings between 2019-2020.
Although the sector has been affected in some ways, it is clear that this has not had a negative impact on care homes’ ability to obtain dependable revenue streams and remain attractive to prospective investors.
A Healthcare Market Sentiment Survey conducted by OPRE found that 88% of investors agreed that demand for healthcare real estate will continue to rise, alongside a huge 60% of residential developers confirming that COVID-19 has not had an impact on their development strategy.
However, 64% of residential developers also confirmed that the pandemic has had an impact on design specifications and new build layouts, as well as predicting increased construction costs in the short term. This further reinforces the idea that although the sector does not remain unaffected by the pandemic, those within this industry are making strides to put precautions in place for future developments.
As the UK’s ageing population increases the need for supply and demand does too. Deloitte’s 2019 Global health care outlook document highlights that 22% of Europe’s population will be over the age of 65 by 2023. The document also confirms that whilst this is representative of exceptional healthcare advancements, there are not enough care homes to accommodate the growing elderly population. This demonstrates an increasingly important need for more care homes and residential developments.
Are care homes an investment worth investigating?
The recovery of the industry, post-pandemic, is vital and there are clear signs that despite an obvious impact, there are major steps being taken to aid a fast recovery.
The burning question remains, should investors be looking to invest in care homes and residential developments as a portfolio diversity option?
As we start to look to the future and consider life beyond COVID-19, it’s worth considering which of the development sectors presents the best long-term investment opportunities.
We’ve put together some worthwhile considerations when it comes to making investments in care homes:
- As with any investment, it is extremely important to familiarise yourself with all information that could impact the associated value.
- It is wise to do some research into the operational performance of the care home. We would recommend starting with the Care Quality Commission rating.
- Learn more about the management team. They’ll play a crucial role in the running of the property and will give a great insight into the reputation of the business, which will of course impact any investment you make.
- Look beyond the initial investment and consider long-term required investments in the property. If it has previously been underfunded, it may require a higher amount of investment than you initially anticipated to bring it up to a good standard.
- The structure of the operating company should also be considered.
As we move towards a new normal, it is clear that many aspects of life we were comfortable with have changed. The property market has undoubtedly changed with it, and as part of that certain sectors now hold more investment security than others.
In September 2020 Laing Buisson reported that the UK care homes market was valued at £16.6bn. It’s a market that relies on a strong business model of high-quality real estate, long-lease operators and repetitive income. Set to be one of the most reliable residential sub-sectors for inflation benefits, care homes seemingly have a lot of value to investors regardless of the COVID-19 pandemic and how it has affected the sector.
Book now to secure your place at our Care Homes & Retirement Living conference – on Wednesday 24th November.
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By definition, co-living involves sharing the space within areas of a property that have the capacity to be communal. Operational spaces such as kitchens, lounges and work areas are all openly accessible by residents with the exception of private bedrooms and in some cases bathrooms too.
With communal space and shared amenities being a key theme in co-living, there is no doubt that in a time where the social aspects of co-living are seemingly less attractive than they once were, the market will have been affected. So, how is this affecting the co-living community and the investments behind it?
Co-living has for a long time been billed as a solution to the ever-lasting housing crisis. Student Housing, Retirement Living, Co-Living, Single-Family Housing and Build to Rent, have all offered huge relief to the thousands upon thousands of individuals suffering the effects of what The Guardian calls ‘urban loneliness’.
While the industry has been widely criticised for attempts to cash in on the attractive social elements associated with co-living set-ups, the aftereffects of the pandemic that threatened to tear up the very structure of social environments, has seemingly not deterred individuals from participating in co-living situations.
Adapting in unprecedented times
Despite popular belief that the world’s social constructs will never be the same again, co-living situations have in many ways provided comfort and reassurance to those living in this alternative style throughout the pandemic. A number of limitations on the ways in which we communicate with one another has meant several thousands of individuals living alone have become entirely isolated from the outside world, all the while pre-covid ‘normal’ social constructs have in many ways been reinforced for those co-living.
Although social constructs have in some ways benefited from this ‘time out’ period, many investors have shared great concerns about the concept of shared spaces in a worldwide pandemic.
Adapting management regimes throughout the course of the pandemic to adhere to health and safety requirements will have been pivotal to the success of any co-living situation. There are undoubtedly still several smaller developments that will have struggled to meet and sustain this demand for additional space (social distancing) and more thorough cleaning methods.
The advantages of co-living in Covid-19
- Co-living communities – Creating communities throughout the pandemic has encouraged individuals to tackle loneliness in isolation. Some developments have used digital transformation to offer tools for hosting virtual events, such as social gatherings, exercise classes, and even cooking classes, something that has been especially important for single occupants during the pandemic.
- Integrated experiences – With extensive digital technologies at our disposal, just like the hospitality sector, co-living providers have been able to integrate digital transitions into the process of ordering food, drink and in some cases even medicines to residents.
- Opportunities for safe containment – Individuals have been able to maintain a safe distance and uphold a safe space for themselves. Smaller areas are ideal for self-isolation, with minimal work required to keep the space clean and tidy, while still providing a homely feeling.
Is co-living here to stay?
Among many other alternative living options, co-living has demonstrated its worth as an option in this scope.
The adaptation and resilience demonstrated by the developers and organisations that run co-living spaces to ensure this living style remains social-focused is enormous. In a time where human desires are shifting to prioritise wellbeing and sustainability over the need to be on the property ladder with a place of their own, the co-living alternative is proving to attract more investment.
Development focused projects such as co-living provide reassurances that the struggles we have faced will be accounted for in future design elements to avoid any unnecessary closures.
The demand for co-living spaces has seemingly increased in line with our increasing desire for connection and shift in ideals – as long as the developments can keep up with this recognised demand, there is no concern about the future of investment in alternative living, more so co-living.
The Alternatives Property Investment Conference
The last year has been unprecedented for many reasons, and global property markets have seen fundamental changes, some of which may last forever, as the way people work and live has evolved.
We have seen that some traditional property assets face an uncertain future and there is huge investor interest in the ‘Alternatives’ Property markets – in particular, Student Housing, Retirement Living, Co-Living, Single-Family Housing and Build to Rent. Backed by long term certainty of demand and growth, they are now even greater opportunity areas than before.
Our Alternatives Property Investment Conference will cover other emerging property sectors attracting strong interest, including logistics, data centres and serviced offices.
The 4th Annual Alternatives Property Conference will take place in London on Tuesday 28th September, providing a forum for those in these sectors, and those looking at new sectors, to meet and discuss opportunities.
This event is likely to sell out quickly due to our more limited capacity, so please book early to guarantee your place.
Having spent over 30 years with Savills and headed up its London Residential Development team, Dominic Grace is an expert consultant in the fields of property development and sales capability.
Ahead of our upcoming 14th annual London Resi Conference in May, we sat down with Dominic to discuss the general outlook within London’s residential market right now, as well as some of the key themes that we will be examining at the conference that are likely to drive movement within the sector.
Following the remarkable events of 2020, what’s the general outlook for the London residential market going into 2021?
There is an element of no one really knowing yet and a huge amount of uncertainty swirling around. If anything, one might argue that London had gone a bit ‘ex-growth’ where the market could not sustain the extraordinary growth it had seen previously, and this is down to affordability issues.
The bottom end of the London market has performed incredibly well, whilst we know that the prime end has been under pressure for some time now. COVID-19 has accelerated trends that were perhaps born out of affordability, but now people are no longer working five days a week in London, the ability to move further out of the commuter belt and get more bang for their buck has been accelerated.
There are some interesting challenges within this if you stretch that thinking. Do we actually need the number of homes in London that we’ve all got used to saying we do? With the census coming up in April, it could throw up some interesting facts and stats, such as whether we’ve been overestimating the new housing needed in London.
So, there are some interesting forces at work currently. Some point to London having less housing pressures generally and perhaps less upwards pressure on pricing.
What needs to happen in London now?
We hope that London will re-establish itself as a key global city; one of great culture and opportunities for education. In a post-COVID world, we can hope to keep delivering that. But to do this, we need to see the West End bouncing back, as well as retail and hospitality, so London must address these challenges very quickly.
There are some big decisions to be made, although some have been creeping up for a while – around sustainability, for example. It’s likely that Central London will go electric vehicle-only by some incredibly short deadline. Whilst the government target is 2030, you have to consider areas like the West End and Central London, the beating heart of London, and what brings so much of the international market to London. We’ve got to make some bold moves to thrive, otherwise things can die quickly if they aren’t monitored and the infrastructure will fall away.
I’m not saying let’s all go electric immediately because it could cause a lot of chaos in terms of infrastructure, such as implementing charging points – but when it comes to initiatives to, say, pedestrianise Oxford street, I’d say do it.
What can we expect from the London Resi Conference 2021?
Well, we won’t have a shortage of things to talk about this event! We’ve got some great speakers lined up and I’m also keen to get people up that can discuss short-term solutions to cover the lifespan of a development.
Property development
I think we’re at a major crossroads in property development on a societal level – Tony Pidgley was the end of an era for that ‘buccaneering’ developer, the master of the land deal. In the past, you had to be good at securing the land in order to be truly successful; it didn’t matter how good you were at designing and building, you had nothing without land.
History will look back on land dealers as having dominated the industry, but a part of me hopes that, moving forward, development will be more about the design, build and customer-facing elements to move forward, creating opportunities for joint ventures with landowners.
Land availability
It’s amazing how much land or sites do just pop up, even in London where huge swathes are still industrial. How much of this land is still in the ownership of public sector and how does this come forward? One thing we will discuss in relation to land availability is the very topical Mayoral Election because you need a Mayor to keep that moving on.
Politics in general will of course be very topical at the conference, looking at how London’s delivery is monitored and pushed forward, and whether it pulls back into Whitehall rather than City Hall.
Brexit
The weird thing about Brexit now is that we can’t really test its effects because of COVID! What is apparent and creeping out is that it’s not as seamless as has been painted. We’re hearing stories about complications with basic acquisitions, taxes and exports that are affecting businesses.
Overall, you have to be positive; we have to crack on, but again, it does come back to making some bold moves for the UK to be able to command the sort of space that Singapore does.
Sustainability
Sustainability is a big talking point from all perspectives.
A lot of real estate is about the money, so even the hard-nosed private equity world has woken up to the fact that they need to be seen to be actioning all their talk, which means they’re saying to developers that they won’t invest unless stringent sustainability benchmarks are met. It’s great because it’s essentially a combination of carrot and stick to move things along to where they need to be.
Healthcare and wellbeing
I think a lot of movement within the healthcare sub-sector will be around the monitoring of it, but also the connection between good building health and wellbeing. This will be especially important within some of the alternative sectors, such as retirement living.
Environmental performance will look to measure things such as carbon, efficiency in build and operation, air quality and overall impact on mental health. Even the stress that poor connectivity can bring – we’re still getting our heads around this. These factors will be scored and rated to provide the market with an idea of building health and affecting overall value.
It’s interesting to note that most research so far has revealed that, when push comes to shove, consumers tend to place these elements lower in importance at the moment when it comes to housing priorities. We’d hope that’s starting to change; Home Views have some research around this to indicate that residents are increasingly looking for authentic sustainability. It’s a bit like recycling initiatives, you need these things to happen at government level to really make it happen.
Planning and developments
The planning system has long been based on the traditional domestic household model, but we cannot ignore the opportunities around repurposing office and retail spaces. The question is whether these spaces can or should all become housing. I’m a big fan of the fragmentation of tenures and use-classes, so do really welcome the ending of that.
Touching upon the market forces affecting areas like co-living, I think it would be awful if all planning has the fear of pandemics now going forward. There is such pressure on the developer to pre-sell the product, but very few British buyers tend to buy off-plan early enough to de-risk developments and projects.
Dominic will be chairing the 14th annual London Resi Conference on Wednesday 5th May 2021. Click here for the full agenda or book your place via the LD Events website.
With the repercussions of the pandemic waging on and the reality of Brexit yet to come, 2021 looks set to be a year of settling into new habits and behaviours. We’re looking at some of the key living and working trends to come in the new year, as predicted by experts.
Redefining of home zones
According to research from Beko and The Future Laboratory, we can expect a greater sense of blended spaces where home design is concerned, evolving from our need for the home to facilitate work, personal and leisure environments throughout this year[1].
Where open plan living had previously been popular for more flexible ways of utilising space, it’s likely that the idea of multi-functionality will come into play much more from 2021. Moreover, insights from Dezeen have highlighted that buyers are increasingly looking for variety in rooms and spaces within homes, moving away from open plan altogether in a bid to create more privacy and clear separation between living and working environments[2].
Hyper-locality and ‘regional revival’
Similar to the idea of ‘zones’ within housing, although not a new concept as far as town planning and urban development is concerned, some unique opportunities could come forward for smaller neighbourhood hubs, where a stronger focus on local services will provide much needed boosts to small businesses and stimulate local economies.
Following a year in which people have adjusted to filling their day to day needs locally or online, it stands to reason that this shift will remain in place for many, avoiding a need to commute to city centres. In fact, this trend looks set to go global, according to Professor Carlos Moreno, whose concept of a “15-minute city” was designed initially to eliminate pollution and create better opportunities for sustainable transport, green spaces and additional community facilities, and is reportedly being discussed within several different city planning departments worldwide[3].
Further afield and following the Government’s announcement to move thousands of public sector roles out of London and spread across regions of the UK, we may also start to see players in the private sector considering regional hubs to create what Savills has described as “pockets of opportunity”[4]. With the nature of remote working creating a wider talent pool, organisations choosing to base themselves in varying cities with higher education prospects and good infrastructure can also support a more mobile skilled workforce to remove previous barriers.
Remote working and hybrid set-ups
Flexible working was not exactly a novel concept before the pandemic took hold, yet many organisations still had not considered it within their own structures. Now, with a good nine months of evidence to show that businesses need not worry about fragmented communication or employee productivity, plenty have made decisions to move fully remote and others have empowered employees to make the decision based on how they work best.
However, some building experts believe that we should let core social and community requirements unfold before rushing to build new spaces[5]. We’ve already seen how those in alternative residential sectors such as Build to Rent or Senior Living have adapted based on shifts within different demographics, but it could be argued that there is still further to go as the events of 2020 is one of very few in a lifetime to affect all populations at once.
Better access to healthcare within local communities, greater focus on pedestrianisation and open spaces for wellbeing have long been discussed as upcoming trends in the way we live moving forward, but the demand of particular facilities, such as mental health support, in 2021 is itself unprecedented.
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https://www.homesandgardens.com/news/three-ways-that-house-design-will-change-in-2021
https://www.dezeen.com/2020/12/09/homes-open-plan-spaces-albert-hill-modern-house/