Student housing may take hit as overseas students fall
Student accommodation has been a booming sector
Investment into student accommodation could take a hit from the impact of the coronavirus, according to legal and property experts.
As uncertainty surrounds the format of new courses – with an increasing number of students being taught online – there are concerns that providers of accommodation may pause developments if demand drops.
Competition is likely to increase among universities for a smaller number of international students. Trade sources say most locations may see a 10% to 30% drop in occupancy numbers for 2020/21, while some universities are planning for a worst-case scenario that could involve losing up to 75% of their overseas students.
A new Scottish bill enhancing the rights of students over housing agreements is the latest potential impact on the sector.
The Coronavirus (Scotland) bill introduces notice to leave periods through which students can quit purpose-built student accommodation for Covid-related reasons.
Student housing specialists say the bill provides reasonable protection for students but could have a knock-on effect on the providers of student accommodation, of which 87% has been delivered by the private sector.
Figures compiled by the Scottish Property Federation shows that providers have already voluntarily waived about £59 million in student rents, while some have pre-empted the bill by agreeing to release students from contracts for next year.
However, demand for physical presence and the communal experience of higher education is likely to see the sector pick up over the longer term, although the type of accommodation provided may change.
Property sources believe students are going to prefer and require more individual space to make social distancing easier in existing as well as new accommodation. That may result in more studio flats and less communal activity space.
One Scottish lawyer remained optimistic that the sector will prove resilient over the longer term.
She said that while the pandemic “will undoubtedly result in a transactional pause for providers, there remains a strong appetite for higher education and for the traditional university experience to continue making the sector well placed to bounce back when lockdown and travel restrictions ease and greater certainty returns to the market.”