What does 1 million applicants mean for student accommodation?

UCAS is projecting that by 2030, there could be up to one million applicants for Higher Education in the United Kingdom – throwing up countless considerations across the sector. The UCAS essay series Journey To A Million is exploring some of these issues and how they might play out through the rest of the decade.

Ahead of the release of Unite Students’ essay, co-authored with Knight Frank, we’re looking at what the Journey To A Million means for student accommodation – covering supply and demand, research into the student experience, and what accommodation for the next generation of students looks like.

The expert guests in this episode, hosted by Jenny Shaw, include:

• Ben Jordan, Head of Policy at UCAS
• Katie O’Neill, Associate at Knight Frank
• Deenie Lee, Co-Founder at The Property Marketing Strategists
• James Ballard, Innovation Manager at Unite Students

You can listen to the episode, or read the transcript, below.

‘What does 1 million applicants mean for student accommodation?’ transcript

Jenny Shaw: Today, we’re looking ahead towards the end of the decade and asking ourselves, what do tomorrow’s students want from their accommodation? Over the coming years, we can expect cohorts of students that have been affected by the pandemic at different stages of their life and education. What impact will that have on their needs and their expectations of their student accommodation?

It won’t long before we’re welcoming Generation Alpha to university, the so-called ‘iPad kids’ who will be different again from Gen Z. Add to this a cost-of-living crisis and shortages in student accommodation in some cities, and it sounds like we’re in for some interesting times. Fortunately, we’ve got a panel of experts in the studio to help us make sense of it all. Each of them has carried out research on an aspect of the future of student accommodation.

Before we hear from them, I caught up earlier with Ben Jordan, Head of Policy at UCAS, about their Journey To A Million campaign. Ben, can you tell us about the Journey to a Million campaign?

Ben Jordan: We are projecting that by the end of the decade, we could see up to a million higher education applicants. Now, just for a sense of scale, back in 2006, we had half a million. Present day, we have about 750,000. What we see in the next couple of years is really significant growth in demand for higher education. Now, this is largely powered by an increase in the 18-year-old population and also continued demand from international students as well.

Now, this journey to a million itself presents a range of challenges and opportunities across the entire student life cycle, ranging from that initial choice and the competition for those choices to what the student experience looks like, to what the living experience looks like, but then, ultimately, what graduate employability looks like as well because, ultimately, the journey to a million itself isn’t necessarily an education issue. It’s an economic issue.

What we’re looking to do through the journey to a million campaign is really raise an awareness of what it is and how we can seek to tackle those challenges, but also capitalise on those opportunities from this once-in-a-generation event. What we’re looking to do is a series of essay collections. We went out to a range of education leaders and asked that question, “What does the journey to a million mean for your sector or section?” We’ve got around 50 essays that have come into us. We’re releasing those across the summer in partnership with Unite and Knight Frank.

Jenny: First of all, I think a million is a huge number. It’s hard to get your head around what a million applicants will mean. Can you just tease out maybe some of the key points of that?

Ben: There’s a number of implications in that because we are in a world at present where the vast majority of students get their first choice. A significant number of students get all five offers from universities. Both of those numbers will go down as competition seeks to increase. I think, ultimately, one of the big challenges in relation to the journey to a million is that increasing competition for opportunities across the full range of post-secondary choices, whether that’s an undergraduate option or an apprenticeship.

The journey to a million itself has implications in many more areas. The student experience, for example. How do we ensure that they’re having a high-quality teaching experience? Equally, how do we make sure that they have a high-quality living experience as well?

Jenny: Certainly, where are they all going to live is a question that we get a lot when this comes up. What are your thoughts on that?

Ben: I think it’s a really tricky one. I think one of the reasons we’re really stimulating this national debate around journey to a million now is because we still have time to do something about this, because many of the responses that will be needed will take time to action and implement. Accommodation is a key example of that. You can’t build new accommodation overnight.

It’s a really, really challenging situation, which is why we’re raising this discussion now because I think one of the biggest challenges we have in relation to the journey to a million is that, inevitably, you might see the most disadvantaged students squeezed out in this more competitive environment. It’s absolutely key that we see to protect their interest in this growing demographic.

Jenny: We’ll be sharing an extended version of that interview on our podcast feed over the next few weeks. Thank you, Ben. Now, in the studio, we have Katie O’Neill, who leads on student property research for Knight Frank; Deenie Lee is co-founder of The Property Marketing Strategists; and James Ballard is Innovation Manager for Unite Students.

Jenny: Great, so I’m going to start with you, Katie. The UCAS Journey to a Million campaign predicts a sharp growth in student numbers to the end of the decade as we’ve just heard. Presumably, a lot of these students will be looking for accommodations. I wonder if you could just put this in numbers for us about the size and the scope of that future accommodation need.

Katie O’Neill: Yes, of course, Jenny. I’ll try my best anyway. That’s a really, I think, imperative question to start us off with because, really, one of the most common reactions we saw to the idea of a million new applicants was, “Where will they all live?” There are currently about 2.2 million full-time students in the UK, which is equivalent to about three students per available PBSA bed space.

If we assume that about 80% of the students that go to university need some form of accommodation and we apply that benchmark to the UCAS forecasts, then we’re talking about 400,000 additional students needing somewhere to live over and above the current levels by the end of the decade. The supply in PBSA,it is increasing, but it’s doing so at a rate of about 20,000 to 25,000 new bed spaces a year, which clearly falls well short of that projected demand.

The projected increase in students is likely to be quite challenging for the sector, both in terms of the volume of bed spaces, but also that choice available at different price points.

Jenny: I suppose as well, not in those UCAS numbers are the international post-grads who pretty much all of them have some kind of student accommodation need. What impact does that have on the supply?

Katie: Particularly when we look at the international cohort students and, specifically, those domiciling from outside of the EU, we actually saw in our latest figures, September 2022, that intake that a record 1 in 10 of all placed applicants was domiciling from outside of the EU. I think it would be really tempting as well to assume that the private sector will just step up and meet this demand, but that’s just really not a given.

When we look at the wider market at present, there are challenges around the price of land. There are challenges around high construction costs, skills, labor costs. All those shortages and pinch points for the sector are notable headwinds in how we’re going to actually meaningfully increase supply from its current level.

Jenny: Katie, you’re just about to publish your 2023 student accommodation survey with UCAS. That’s a survey of 20,000 students telling us all about their student accommodation. What has that told us about student needs and attitudes?

Katie: That’s right, Jenny. Thanks. We are publishing our fourth edition of our student sentiment survey on the 27th of April. I think if I was to pick out some of the key themes from this year’s survey, I’d probably say they center around affordability, student satisfaction, and wellbeing. It’s of no surprise that costs have leapfrogged to value for money as the most important factor for students that are influencing their accommodation preferences in this year’s survey.

We actually saw that 9 out of 10 students enrolled at universities across the UK are worrying about the cost of living, so really stark finding coming out there. We also found that 84% of students indicated that their accommodation costs were either affordable or only just affordable. We’re seeing some stark findings around cost of living.

However, positively, PBSA, although, generally, it is slightly more expensive than the private rented sector, the overall cost per annum being fixed and inclusive of all bills is really proving quite positive for students and changing maybe that sentiment towards PBSA.

That all-inclusive cost is proving to offer them a little bit of confidence in their stay. The other two big themes there that I mentioned as well were satisfaction and wellbeing. I think they’re actually quite linked to one another. Encouragingly, we’re seeing the majority of students reporting that they are really satisfied with their accommodation. This is the case for the third success of year in a row, so really some positive feedback there from students showing the benefits of professionally managed and high-quality accommodation.

Linked to this is definitely that wellbeing team and the role that student accommodation plays in supporting wellbeing. For students living away from home, purpose-built accommodation is viewed as an opportunity for learning and for development. Really, that’s quite in contrast to that bed space narrative that we saw maybe for quite some time of the previous generation. Much of that has been driven by students themselves who value and benefit that sense of home and safety and community and belonging.

Jenny: I think, for me, that’s been the biggest change within the sector in the time that I’ve been around. Deenie, I really want to come to you because, through The Property Marketing Strategists, you’ve done a research project called “The Future of Home.” It’s quite a holistic view of what students want, not just now but in the future. First of all, I wanted to ask you, why did you carry out this research? What was the prompt to do that?

Deenie Lee: Ironically, it was another piece of research that prompted us to do this. When Sarah’s business partner first got together, we had worked on student accommodation for a long time. We hadn’t really necessarily seen that product moved forward that much in terms of what was going on in bedrooms. Yes, we’ve got all these social spaces. We’d really developed the communal spaces for students, but we hadn’t really done that much around the bedroom.

We really wanted to understand what the sector was doing around pushing that innovation. We did a survey with executives, operators, marketers across the sector. One of the things that overwhelmingly came out of that was that we weren’t asking consumers anything about the product. In fact, 82% of people came back and said, “We don’t ask the consumer enough about what they want from their homes or what they want from student accommodation.”

What we were conscious of is lots of operators do research, brilliant research, but it’s very much with those customers that are already in your product, already in that accommodation. We wanted to take a much wider stretch of all students whether they’re living in HMOs, whether they’re living in PBSA, whether they’re living at home, and understand what it is that makes home.

I guess one of the things to ask is that asking the customers that have already chosen your product doesn’t always give you the answers that you should be seeking. We wanted to do something quite independent of one particular operator and take a whole tranche of students, 2,500, we asked, and really delve very deeply into what makes up home. It was basics, the really crying out for good, basic, suitable accommodation.

Overwhelmingly, young people told us that what was more important is the things that make up the fabric of the building. Things like soundproofing, being able to adjust the light, having a comfortable mattress, which also when we’re talking about wellbeing, it’s all things that go into having a good night’s sleep. These things were much more important than really exciting facilities like cinema rooms and social lounges.

The other thing that I think that we discovered, and, again, Katie, I think you talked about this in terms of product diversity, is that not all students are the same. Yet, by and large, the products that we provide is very much all the same for all different student types, but all students have a different type of range of needs. We can’t really just say that students won’t miss. I don’t think we always provide that in the sector.

I think that one of the big overwhelming things that we’ve seen is that, actually, we do need to provide more diversity of products. One stat that we often repeat is that we found that 50% of people want to pay for a gym, which is great. You’ll find gyms in lots of student accommodation, but that also means 50% don’t want to pay for a gym. Where do those students go? Where do they find accommodation that means they’re not paying for a gym that they want to do?

I think the journey to a million in reference to this as well is that we’ve got a really grown domestic population here. They don’t have the same budget as international students do. I think that’s where this diversity of product is important in understanding that domestic students don’t want to pay for all the bells and whistles of their job and pay for good accommodation, which is something that I think we can work towards.

Jenny: That’s really interesting to hear you say that, keeping immunity simple. Part of our survey findings is a willingness-to-pay section. Stronger Wi-Fi remained the number one service that students living in PBSA were willing to pay a premium for. The opposite then is true for immediacy such as maybe things like swimming pools or cinemas or game rooms. It was stronger Wi-Fi. That was the service that they were willing to pay a premium for, which I think, yes, perfectly supports what you were saying there.

James, you spent the last year working on some new design principles for future student accommodation. Can you just tell me a little bit about that? First of all, how did you approach this?

James Ballard: Yes, you’re absolutely right. We did begin work on some new designs around about a year, year and a half ago now. Our initial ambition was to design our next generation of bedroom and common spaces. We quickly honed in on quite a key challenge within the sector more generally that a lot of the products, configurations of flats and of buildings more generally are quite centred on their first-year customer.

Actually, there was an opportunity that we highlighted to cater to students a little more comprehensively as they progress through their university journey. Yes, that aligned with some work that we did looking at different customer segments as well, so looking at different personality types and preferences. Again, we really tried to weave that into our thinking to ensure that we were designing properties and products and flats that really fitted the needs of a very diverse and ever-changing group of students’ needs.

How we went about doing that, we set a bit of an experience vision that we really want to create within our properties. Then we really centred the designs that we’ve since worked on around a number of signature experiences as we’ve called them, so really key moments that matter on the student journey. We’ve really aimed to build, as I say, the designs around those.

We also created what we call the “design style,” which is almost like a distinctive look and feel that we’ll be aiming for within our properties that will be quite unique to unite but should adapt quite nicely to those different customer groups and needs. Those are the headlines, I suppose. We’ve since then gone into detail on different spaces really around those principles.

One of the key things is really looking at different flat topologies. We’ve got across our estate, typically large cluster en-suite flats and studio flats. We’re looking at different typologies that sit within those two in terms of the number of bedrooms per flat to what we perceive to cater to the needs of students a little more effectively on that journey really from first year through to graduation.

Jenny: I think that’s really interesting because apart from adding en-suite bathrooms, the design of the student accommodation in terms of its bricks and mortar hasn’t really changed maybe since the ’60s. Is there anything you’re able to share about some of those innovations?

James: Naturally, until the designs come out, we’ve been quite guarded with them. We put a lot of work into them. To give you some headlines, we’ve looked at, as I say, all aspects of our properties and our flats. We’ve got a number of different en-suite designs that we’re working through and testing at the minute. Some are a little more steady-orientated in that focus. Others are a little more social in their orientation. Essentially, we’ve got configurations that sit between our standard studio, single-occupant studio, and our larger 6 to 10-bed cluster flats.

We’re looking at a slightly smaller flat with perhaps less bathrooms and is a little more open plan and social in its orientation aimed at really rivalling an HMO product really for a group of returning friends who know one another.

We’ve also got a two-bed, two-bath configuration that we’re working on that we think will be great for a student that perhaps wants to knuckle down in a maybe third or fourth year or whatever and focus on what’s important to them at that point, which we presume is to studies and getting those results at the end of the year. We’ll be testing those this summer. We may not even have just one either. We may have a couple that we take forward.

Jenny: How have you included students in this design process? I know that’s been quite a big part of what you’ve been doing.

James: Yes, we’ve done insight gathering, I suppose, from a reasonably small group actually to this point. That really is going to ramp up as we build out some of these concepts this summer. On that front, we’ll be going through lots and lots of students and other key stakeholders, well, essentially, fine-tune them really to finalise our specification moving forward tail end of this year.

Jenny: You’re building some out, aren’t you?

James: Yes, absolutely. We’ve got a couple of test sites in Birmingham. We’re excited to build those out. We’re hopeful they’re going to have a huge impact. Yes, watch this space.

Jenny: You’ve put a lot of effort as well into thinking about the social spaces in different ways.

James: Yes, essentially, what we’ve created is almost a list of different modules that we can apply to different properties, depending on the needs of the customer and the property itself and any design features that sit within that property, considering also the local community within which that property sits. As an example, if a property is situated directly opposite the university gym and there’s a huge facility there that’s subsidised and it’s great for gym goers, we probably wouldn’t go big on our gym module in that property.

Given that the likelihood is that if someone was a big gym-goer, they would go over the road to the university gym. We might reallocate that space to another use. We’ve got this list of modules that we can handpick from, depending on the property, depending on the community it sits within, and depending on the students it’s serving in order to get that perfect blend really for students.

Jenny: That is so interesting. I’m wondering what it tells us about the future, particularly as we’re looking at this cost-of-living crisis. Is it going to be about those brilliant basics?

Katie: Yes, maybe it is back to basics, Jenny. I think I could probably agree with that.

Jenny: Deenie, how do you market that? Because it’s not a sexy thing to market, is it, that we’ve got all the basics right? How do you do that?

Deenie: It might not be as easy or sexy to communicate in a great cinema room, or I think we saw one student accommodation filled with a slide in it. Yes, that’s great for marketers and it’s brilliant. It can create loads of content. I think if you’re smart and you can communicate directly with your audience, there’s lots of great ways to just say, “Actually, we give you what you want. We give you a great home. We give you security. We give you the space that you need to live the life you want to live.”

Involving your marketing team in those early discussions around the product you’re building is really key. I think it’s the same thing around sustainability is that one of the things that we’ve found through our research is that students want sustainable buildings. They want the homes that they’re living to be sustainable, but they overwhelmingly don’t want to pay for it. They don’t feel that it’s for them to be paying for. That’s for industry to be paying for.

Also, what we don’t do is we don’t really tell people very much about what goes into the building because we don’t think it’s sexy. We don’t think that rainwater harvesting is sexy or all those things that go into making a sustainable building. I think it is about making sure that people are aware of how a building is built. Soundproofing is a great example. There is a practical output of great soundproofing and I think you can sell that very well.

Jenny: In the hotel sector, of course, famously, Premier Inn has made a real feature of their ‘great night’s sleep’ guarantee. Can you see that as something maybe that’s going to come into a student accommodation marketing over the coming years?

Deenie: You know what, Jenny? That’s exactly what we always talk about is that this promise of a great night’s sleep is something that I always think about when I’ve got to stay in a hotel and I haven’t got a massive budget. It’s like, “Well, I know Premier Inn. They’ve got a good bed, so I will go and stay there.” I think I’ve talked about comfortable mattress for a long time in student accommodation.

We just don’t talk about it, but it is a fundamental part of wellbeing. It’s a fundamental part of being able to get up and study in the morning. I think there is certainly more things we can do that focus on– I guess it comes down to Maslow’s hierarchy of needs really is like, how do we make sure we get sleep, food, shelter, security, then everyone feels safe, comfortable, and like it is home?

Jenny: That’s so interesting. I’m now getting that idea that the future of student accommodation is about going back to basics. That’s what students are looking for in this post-pandemic world. I’m really interested in what that might mean in terms of how student accommodation is managed. I know, Katie, you mentioned the 24/7 security as being important in terms of safety and wellbeing. Are there any other things that either of you want to mention around the way that accommodation is managed and what the expectations might be over the coming years?

Deenie: I think insecurity is vitally important. That scored highly on our research as I know it did yours, Katie. The one thing that we also did some study in was around community and community involvement. When students choose to go to a university, they choose the university first, but they’ve also chosen to go live in a city and explore that city and be part of that city. As a sector, both universities and student accommodation understand.

We are very focused on how do we make sure they integrate with that university community or that building community because that gives them that sense of belonging, but we don’t do so much around how we make them feel safe and comfortable within the community in which they actually live. We ask some questions around what makes them feel part of that community. Some of the results were quite surprising for us.

50% said actually going to independent restaurants and shops was really important, but also 25% said local work and volunteering was really important. I think there is more that we can do around ensuring that we look outside of our building community and our security and think about how we can support students to integrate better. It really helps to build those relationships and engagements beyond just those university in the building, which as well will hopefully help more cities retain more graduates going forward as well.

Katie: I completely agree with what you’re saying. We think about that local community and the impact our students have on it. I think that relationship right from developer through to student stage is more important than ever when we consider what we spoke about at the start of this podcast. The idea of one million extra applicants by 2030. That relationship and having everyone in sync, it’s going to be more important than ever.

Jenny: Because, Katie, the local community plays quite a strong role in the planning process, doesn’t it? If we do need to build more student accommodation, local communities need to be really on board with that. Is there anything you want to say about that?

Katie: Yes, absolutely. I think when we consider that community benefit characteristic, it’s such a feature now when developers are going through that application process right through to literally PC’ing on the building. Looking at how local authorities, communities, funding partners, all the parts at play here, they expect and the community expects them to deliver social value.

Now, how it’s delivered is a bit more open for discussion, but what we do know is that relationship is so important. Some examples we’ve seen of developers generating that link might include the provision of space within a scheme of maybe having a particular social link to a community like sponsoring a local sporting event or potentially employing local labour through the construction phase.

I think when local residents assume that students are somewhat not part of their communities, we’re failing to recognise that emotional investment that students are really investing in their time in university. That narrative that, unfortunately, I feel that sometimes the media can be a bit responsible for of that town versus gown. I think that’s so outdated and obsolete now.

To the point earlier about retention, actually, a very interesting finding and probably our real flagship finding in one sense from our student accommodation survey is that it suggests that almost 40% of final-year students said that they intend to stay in the city in which they study in after graduation. Retaining that talent in a city obviously has huge benefits to the city.

It built human capital across the community playing a very integral role in regional growth there. We all know that universities are part of that economic fabric of the city, but the accommodation the students stay in while attending the university has such a huge role to play in how the student perceives their experience while at university. From the developers that we speak to and the clients that we work with every day, they really do recognise the importance that that has.

James: It’s been, I think, an age-old issue in the student world for certainly many years, isn’t it? That distinction between student world and local community. We perceive that as an area where we can really add value for all stakeholders, for students, and the local community. It’s one of the signature experiences I mentioned. It’s really what we call “live like a local.” How do we encourage students when they move to a new city to really feel like they become part of that community?

One of the areas that we think we can do that is through the creation of what we’re calling at this stage– It’s still a working title, but almost like a bit of a ‘marketplace space’, whereby you move the security barrier up within a property and encourage local communities to come in and use spaces such as food and beverage spaces or retail spaces creating, as a result, a great energy and atmosphere within properties or places within properties that are sometimes quite quiet. That’s something we’re working on.

Obviously, it won’t be suitable for all properties. We do think in certain locations and within certain existing buildings, there’s an opportunity to introduce that thinking.

Jenny: It sounds like a bit of a virtuous circle coming together, doesn’t it, around this is what students want and that’s what they’re asking for? Actually, it’s what local communities want and need as well. That’s quite a positive note to end on. We are coming towards the end of this show. To finish this off, I would like to ask each of our guests to complete the following sentence. “In 2030, student accommodation will…” Deenie, do you want to start us off with this?

Deenie: Yes. In 2030, student accommodation will, I hope, have innovated a little bit, provide more options of products and price, so it’s available to many different people on different requirements and different budgets, and it will be super sustainable.

Jenny: That’s great. Katie?

Katie: What a question, honestly. I think, in 2030, purpose-built student accommodation will be the choice of accommodation for the majority of students. I’m not just talking about first-year students. I believe that by 2030, we would see large amounts of second and third-year students staying in PBSA also. I think that that is actually being really well-evidenced by our survey and it supports that claim.

I think that brand would be a key differentiator in achieving that. New entrance to the market that we’re talking to are really looking to build an offering around quality, around service provision, the essentials of back-to-basics, but also by being in tune with the way students feel and experience their time in university. Maybe a slightly more flexible accommodation packages, shorter and longer tendencies. Those things really is showing that like we are thinking like you are thinking.

The attraction then for more second and third-year students into PBSA will come from operators selling a lifestyle and that brand being so highly integrated into that. The students of 2030, they will be the students who will have grown up in the experience economy where goods and services are sold by demonstrating the effect that that has on your lifestyle. By 2030, I think there’ll be more of a degree, a focus on how the accommodation choice actually enhances that student experience.

Jenny: James?

James: Great question, and it’s going to sound like quite a boring answer, but we’ll much more effectively meet the needs of students and student accommodation. Configurations haven’t changed a great deal since the ’60s. I actually think, across the sector, I’ve got to give credit to our competitors. There’s a lot of influence being taken from other adjacent sectors as well, where design is becoming a much more critical part of a customer experience if you’re thinking about hospitality spaces, co-working spaces.

All of those influences are starting to come through into the student accommodation world. It’s obviously a highly-competitive landscape. I’m seeing across the board actually, designs that are much more aligned better with the customer experience. By 2030, I think that’ll be firmly embedded as a key trend really.

Jenny: Thank you very much. Put a note in your diaries for 2030 to check how well we did!

Thank you to my guests today. You’ve been absolutely brilliant. Thank you to you for listening to the show. If you enjoyed the show, please forward the link to someone else that you think would enjoy it too. Do look out for the Knight Frank and Unite Students essay on student accommodation as part of that Journey to a Million project that’s coming out in May.

Before that, the Knight Frank survey is going to be coming out towards the end of April, so look out for that as well. We’ll have all the links in the show notes. We’re going to have a scoop on this year’s new students this July with the second Unite Students Applicant Index – do keep an eye out for that too.

Read more about Unite Students’ involvement in the Journey to a Million campaign here.