Student residences: time for a partnership approach?

Purpose - Recent years have witnessed significant increases in the number of undergraduate students entering UK higher education. This increase is a result of the removal of the sector-wide cap on student numbers in England and Wales, along with a growth in overseas students attracted by the reputation of UK universities and the weakening of the value of Sterling. Adopting a corporate real estate perspective, the aim of this paper is to understand how the UK student residence market is structured and financed, and to identify the motivations that are driving the strategies adopted by the universities, private sector providers and investors in this market. In doing so, this research seeks to test the appropriateness of the Gibler and Lindholm (2012) model of corporate real estate strategy in the UK higher education sector. Design/methodology/approach - Data was gathered from a survey of UK university secretaries, combined with interviews of private sector providers, bank lenders and the analysis of secondary data on investment flows into purpose built residential accommodation (PBSA). Findings - UK university real estate strategy is mainly one of outsourcing student accommodation to reduce costs as well as employing modern purpose-built student housing as a marketing tool and brand enhancer. This strategy is also used as a risk mitigatory tool enabling universities to adjust to changing student demands. Revisions to the Gibler and Lindholm (2012) model are proposed to reflect the reality of the real estate strategy adopted by the universities. Private sector providers view the sector favourably and are set to be the main providers of new supply over the next decade, entering into strong partnerships with the universities. While there is evidence of some oversupply of bed spaces in certain cities, well-located developments are viewed as an attractive lending opportunity. Since 2013 there has been significant growth in institutional investment into UK student accommodation, albeit sentiment is currently tempered by political uncertainty. Practical implications - The role of PBSA designed to meet modern student requirements is playing a critical role not only in attracting, recruiting and retaining students but also enhancing the overall higher education experience promoting student welfare and well-being. Originality/value - The corporate real estate strategy adopted by the UK higher education sector is an under researched area. This paper focuses on the strategy surrounding student accommodation provision and reports on the findings of an extensive survey of the key players in this sector. The results are of value to all stakeholders including government and regulators, at a time when higher education is facing substantial challenges. The evidence of a growing partnership between universities and the private sector is viewed as a logical solution, both for the present and the foreseeable future.