The international student market in the UK has grown exponentially in the last few years. Between 2017-2018, 458,490 students here were internationals and accounted for 19.6% of the total student population in the UK (pg 4). Only the US has a larger international student market standing just below one million. Given that foreign students make up such a substantial part of the demographic, it’s important to provide them with suitable accommodation that meets their needs.
Currently, the UK is the second largest market for purpose built student accommodation (PBSA) outside of North America, with an approximate value of £50bn. The growth of PBSA has increased rapidly over the last decade, especially in the UK. In 2018, our nation accounted for 31% of the total global investment in PBSA (pg 10). The cost of traditional student accommodation (University Halls and HMOs) has risen drastically in line with student fees. In London, it can cost a student over £1000 a month to live in a shared property close to lecture halls.
This is why investment in PBSA has grown so much. Purpose built student accommodation differentiates itself by providing social living spaces at an affordable price, and the international student market has become increasingly attracted to this style of living. While the 2020/21 academic year may see less international students in the UK due to the Coronavirus, it’s important to keep in mind how much value foreign students bring to the PBSA sector as a whole.
What are the Biggest International Student Markets?
In the UK, the Chinese student market makes up 23.2% of all international students, totaling over 100,000. According to Times Higher Education, there are nine reasons why so many Chinese students choose to study abroad. In terms of PBSA, the four key points to pull out are:
An enriched student experience
To meet a diverse range of people
To develop their language skills
A better educational environment
Purpose built student accommodation is vital in forming close-knit communities at university, as they stimulate interaction through well-thought out communal areas. Spaces need to be inclusive so the national and international student markets can mix with each other and create stronger ties, but it will be interesting to see if social distancing measures will make it harder for students to bond.
In particular, Interior Design plays a huge part in this concept, as PBSA providers need to incorporate trends that resonate with both domestic and foreign students. This is so everyone feels comfortable and relaxed in community areas, encouraging them to engage with one another. If social distancing is still in place for the duration of a student’s course, Interior Design services may be needed to ensure safety as well.
The second and third biggest senders of international students (pg 7) are India, totaling 19,750, and the US at 18,885. Interestingly, only four countries in Europe are in the UK’s top ten international student markets. Italy, France, Germany and Greece take spots six, seven, eight and ten respectively.
This suggests that UK universities have a much stronger pull on the Asian market than the EU market, as Thailand, Hong Kong and Malaysia are all in the top five.
Ashurst believes the weakening of the pound may have been a driving factor in this development. As it stands, the exchange rate for Euros to pound sterling is approximately €1.10 to £1. Because they are so closely in line with each other, it’s likely EU students aren’t seeing as much value for money in the UK as the other foreign student markets. What Makes PBSA Appealing to the International Student Market?
In one in six non-EU cases, it’s the students’ parents or wider family who pay for accommodation, so PBSA providers need to appeal to them first and create spaces that students don’t want to leave.
Parents look at four key aspects when finding a place for their children to live:
Quality living conditions
Safe, central locations
Value for money
A dedicated learning environment
By developing purpose built student accommodation that meets these needs, it increases the potential of parents reaching the conclusion that a property is suitable for their child. Once the parents are onboard, it’s vital to ensure the students actually enjoy their living quarters.
JLL’s UK Student Housing Report found that wellbeing is a high priority. For many, going to university will be the first time these students have moved away from home, which can be a daunting experience especially for those coming overseas and adapting to a new culture.
PBSA schemes need to prove their developments are safe, secure and have plenty of communal areas and leisure amenities for the international student market. This helps students settle into their new environment and creates opportunities to form friendships. In particular, communal areas will now need to be more spacious to accommodate any potential anxieties surrounding Coronavirus.
One of the biggest issues UK PBSA providers face is the constant change of tenants. International students are statistically more likely to stay in the same accommodation (pg 10), according to a joint report from Knight Frank and UCAS. 42% said the option to stay in the same place for more than a year was “extremely important,” which suggests many are looking for accommodation to last for the duration of their degree course.
Currently, 79% of the international student market living in private PBSA are happy with their accommodation. However, 89% said value for money was “extremely important” to them, but only 68% actually rated their PBSA as good or excellent. This suggests there is much room for improvement across the PBSA sector in retaining tenants. Giving precedence to this is the fact 72% of all first year students planned on moving into mainstream private rental accommodation in their second year according to the same report. In order to retain and attract new tenants, some PBSA providers offered students incentives and deals. 40% of first-year students were offered incentives, and 16% said they would not have chosen to stay without it.
The Future of the International Student Market on PBSA
Data from UCAS shows a 6% year-on-year increase in the number of university applications from international students for the 2019/2020 academic year. These proportions were expected to be maintained, but the recent coronavirus pandemic has caused experts to look at these figures again. On the whole, 41% of the PBSA industry surveyed by The Class of 2020 predict business will be back to normal within one semester, but this remains to be seen.
Catering to this demographic means actively supporting community-based living while remembering to include enough amenities to ensure students are getting value for money and staying safe. By listening to what students want and providing them with the right Interior Design solutions in communal spaces, PBSA providers should expect a very healthy flow of tenants at the very least, keeping their PBSA schemes running for years to come.