Of all the niche strategies to choose within property investment and residential development, the student accommodation sector has probably seen the most significant change in the last decade. Large companies such as Unite plc saw an opportunity with many cash-strapped universities unable or unwilling to fund and build more accommodation blocks to match the increase in their student intakes.
The rapid expansion in the provision of purpose-built student accommodation (PBSA) blocks was also aided by the attractiveness of the new stock for many students, compared to some outdated, traditional halls of residence and poor quality stock often being offered from too many private landlords. In addition, the expansion in the numbers of high fee-paying overseas students prepared to pay higher rents for better quality accommodation also resulted in a rapid expansion of the PBSA as developers and investors saw an opportunity.
However, in the last few years we have heard anecdotal stories of oversupply in the PBSA sector and with some locations seeing a saturation of rental supply with some private landlords suffering lengthy void periods. Some local authorities have also seen fit to favour the large PBSA providers by rigorous enforcement of landlord licensing schemes and by also using the Article 24 planning regulation to prevent landlords from creating new HMOs to let to students.
Bearing all the above in mind, I was intrigued to hear earlier this year about the plans of two sisters, Gillian and Ruth Hobbs when I first met them, by chance, and heard about their student accommodation project in Derby. Fast-forward some eight months to August, and there I was standing outside the scheme, which is situated in the heart of the city’s burgeoning student quarter.
Gillian explains how they work together. “Yes we are sisters and until about 18 months ago I had been for the previous five years more of a passive investor in my sister Ruth’s property projects. She has been successfully doing property conversions and smaller residential developments for many years in the London area but I work full-time in the City as a project manager in financial services. For us both, the previous arrangement worked well and I got a good financial return, but then we decided to find out more about adapting commercial buildings for alternate use and both of us attended a course to learn more.