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CAMPUS SERVICES | ASRA | 37
IS THERE STILL ROOM FOR GROWTH IN THE LONDON STUDENT ACCOMMODATION MARKET?
Allan Hilton, Associate ASRA member and chief executive of Cass and Claredale Halls of Residence Association, asks if the market is over for new, private, purpose built student accommodation in London and what the opportunities are now for London universities
I
manage a small, charitable Housing Association which houses 380 students in
East London. Our charitable aim is to provide aff ordable accommodation and, as such, we have some of the cheapest rents in central London. Over the last 10 years, we have
seen massive investment by the private sector in new, high-end, en suite and studio accommodation in London and this has certainly fi lled a gap that the universities were unable to provide. There are currently 25,000 purpose-built rooms in private halls in London (source: Savills). Over 80% charge more than £200 per week on contracts all in excess of 40 weeks per year, with most on 50 weeks. In August 2012, we undertook some research and looked at prices and availability on 40 private halls in London and did the same in the fi rst week of October that year. What we found was that only fi ve (two of which were ourselves) of the 40 halls were fi lled and discounts from the August prices were massive; one major supplier had dropped their prices across their stock from 9.6% to 45.93%, plus were off ering an additional four weeks’ free rent. You had situations in halls where people who booked early paid more than their fl atmates who booked late;
not a recipe for happy living. In general, the most expensive
accommodation had the biggest discounts and the cheapest accommodation was fully booked and off ered no discounts. The rhetoric on the market was that this was nothing to worry about, just the ‘perfect storm’ of 5,000 additional rooms added since the prior year (source: CBRE), the introduction of tuition fees with students applying later, AAB rules, a demographic dip and government immigration policy and rhetoric. In May 2013, we looked at the same 40 halls’ prices to see how they had responded and found that 12 had reduced their prices from the previous year’s opening prices, notably those at the higher priced end. When looking again in October this year, we found that only 16 of the 40 halls were fi lled. It was obvious that the market had responded with bet er online marketing and SEO, particularly some of those that had been caught out previously. But the higher priced halls in sub prime locations were not fi lled.
So what are the opportunities for universities? The fi rst is that charities, such as our
organisation, and universities are exempt from CIL and this gives
ABOVE: Allan Hilton, Chief Executive of Cass and Claredale Halls of Residence Association and Associate ASRA member
them a competitive advantage over private suppliers in the market-place. The second is that if a private supplier enters into a contract with a university to build and supply accommodation for more than seven years, it can then benefi t from the university’s CIL exemption; this should give a great incentive for the private suppliers to talk to universities and strengthens the bargaining position of the university. However, if universities just
copy the private sector and produce more en suite rooms at the higher price point then it will not work because, as previously stated, the market at this level is saturated. In the same survey, by the ULHS, 73% of students said they could pay up to £150 per week; this is the price point that should be aimed for. Universities need to look at cheaper build models that students can aff ord: not just from a moral perspective, but from a business perspective. What is wrong with a hostel model, which can be built a lot cheaper and is a very space-effi cient model? This may be the only way to deliver aff ordability in London; after all, accommodation is not just bricks and mortar; it is about community, pastoral care, creating cohesive groups and paying at ention to their living experience, something that universities are very good at. I am not saying all university stock should be like this, but
there should be more choice. We have hostel-type
accommodation at one of our buildings, Sir John Cass Hall, which is very popular, especially with fi rst year students. UB
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