Many students attending university for the first time this year are in the dark over when their higher education will begin and how much, if any, of it will be done in person or virtually.

The student-housing market has inevitably been hit by the Covid pandemic, with many students deferring or planning to stay at home in the near term. But the adverse impact on student housing might not be as dire as it has been on other property types – rental income on retail and hotels assets has been the clearest victim.

Samuel Vetrak, the CEO of student-housing research firm Bonard, has talked to about 80 different stakeholders, including operators, in Europe, the Americas and Asia-Pacific, and the information gathered suggests that premises are about 70-75% occupied. “This is mainly due to the fact that the high proportion of international students who would have returned back home stayed in the primary premises.”

For the next academic term, or semester, between August and October, depending on geography, operators seem to be having about the same level of bookings or even higher than last year, Vetrak says. “Of course, these bookings are a little bit more volatile because they adapt to the no-cancellation fee and no-deposit policy.” Students do not need to pay deposits and can cancel bookings shortly before arrival.

The expectation is that take-up of student accommodation in the most recent semester and the next will be down by about 20%, Vetrak says, compounded by some international students being unable to arrive owing to a backlog of visa applications and travel difficulties.

Vetrak says that university online tuition has not materially affected the overall situation, and is “not stealing the market share”. He says the provision is not a viable option for students because they tend to be looking for a real-world university experience. Students either want to believe they are going to start in September or will defer their start dates to January/February, rather than opt for virtual teaching.

This “basically confirms the defensive counter-cyclical nature of this asset class”, Vetrak says. Previous experience suggests that higher education does relatively well during recessions. “Of course, as long as we have a pandemic, that’s not the case. But as the pandemic moves to a recession, we will probably see more students.”

The article was originally published in IPE Real Assets (July/August Issue 2020). You can read it online at the following link.

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