Many purpose-built student accommodation (PBSA) operators have found success in the popularity of the sector, and true student has found a reputable place in its success. In conversation with the company’s Managing Director (MD) Ben Morley, we discovered what he enjoys about his career at true student, and the challenges and successes that the purpose-built student accommodation (PBSA) market faces.
Tell us about your career and how you came to work at true student?
Like many of us at true student, I came into the world of student accommodation as something of an outsider. I started out working in the retail sector on the operations side, specifically in the DIY sector during its boom, and later consolidation, years. And then I spent several years working for Whitbread and specifically Costa Coffee helping the brand to expand globally. When I met Pete Prickett – the founder of Bricks Group of true student – back in 2017, I hadn’t considered working in the industry but I really liked the true student story, market potential, and what Pete and the team was aiming to achieve and I really wanted to be a part of it. I haven’t looked back since.
What most excites you about working in the PBSA market?
We are talking about a highly compelling, commercially attractive market that is experiencing record levels of student growth and investment. There is no doubt that these are exciting times to be involved in the PBSA sector.
But perhaps the single most exciting factor about this industry, for me personally at least, is our customer, the student. It’s a real privilege to work on a daily basis with such an aspirational, dynamic customer, who constantly reshapes what we do and demands progressive change. I find that playing a part in, or having an impact on, their lives during such a transformational moment is truly empowering and inspirational.
What are the biggest trends in the PBSA market, and wider student accommodation market, that you are witnessing?
These are certainly interesting times and it seems there are multiple demographic, sociological, political and economic factors all coming into play simultaneously. Domestically, the number of 18-year-olds is set to increase substantially by 2030, while we are also witnessing higher participation rates into HEI from the domestic market generally. Meanwhile, the UK remains a desirable destination for international students – and the number of students we are welcoming from places like India and China now more than offsets the fall in EU students since Brexit. Furthermore, UCAS are projecting that we could reach one million university applications by 2030, which is huge.
Obviously, the pressure all these demographic trends puts on the student accommodation market is immense. And to compound that further, there are challenges to development viability from planning, increased costs of debt financing and build cost inflation, all leading to bed stock shortages and chronic, structural undersupply.
However, the falling supply of HMOs is creating further opportunity for PBSA and global investors continue to target this fast-growing space. Although investment and deal volumes have been limited in Q1 2023, the compelling fundamentals of the market means there remains strong investor appetite for PBSA in particular. Indeed, recent investor surveys indicate that around two thirds of investors are looking to deploy more capital into PBSA over the next three years.
How has true student adapted to meet the evolving demands of its students?
In numerous ways. Actively listening to students is key. We apply what we learn from these important conversations across design and product, and also the delivery of our brand standards, service and experience. This ‘feedback loop’ method is what we’ve used to innovate our approach towards communal areas and to provide insight-led, purposeful spaces that can really add value.
We have also adopted a laser-like focus on creating a sense of community and belonging, while supporting student wellbeing, through our truelife programme. And I’m pleased to say that all these efforts to relentlessly enhance the student experience have driven up retention numbers by 59% across our sites.
What would you say are the main challenges currently affecting PBSA providers in the UK?
Where to start! From local authorities tightening planning requirements to restrictions on locations that can be considered for new development, from the mandated inclusion of affordable housing to the volatility of the local political landscape, there are many challenges that are impacting the number of new schemes entering the planning pipeline.
It’s also worth mentioning that while construction costs are forecast to ease, the inflationary impact is likely to remain across the acquisition of building materials, control of labour costs and tender price inflation. And finally, energy costs have become the biggest operational expense for most schemes, particularly where all-inclusive packages are offered to students, so many PBSA providers will be monitoring the energy markets carefully and hoping wholesale prices come down quickly.
What do you think differentiates the true student offering from other PBSA brands?
We have been working really hard to establish a real point of difference in a very competitive marketplace and I’d say we have achieved this across a number of areas. Our on-site teams are a fantastic USP. We resource all of our accommodations 24/7, 365-days a year, to ensure our guests have access to everything they need and all the support they require, far beyond office hours.
One of our brand’s principle mantras is that we are not driven by what we do, but how we make you feel. This philosophy has become something that really drives our business and makes us unique. I don’t think there are other brands in this industry who are as obsessively guest-centric and experience-led as true student. And this passion and energy is manifested across all our teams who foster close relationships with students, support their wellbeing and help to create a community around our brand and accommodations.
As the PBSA market attracts record investment and student demand, how is this growth being experienced by true student?
We have experienced record commercial performance across occupancy, rental and capital growth. We are now scaling up to 6,400 beds in the UK market and managing £0.6bn of assets across the portfolio via our variable ownership model. We also have a positive outlook for the future, targeting 12,500 beds by 2025 with further exciting investment, development and innovation opportunities planned.
What do you think the role of PBSA providers should be in helping to ease the supply/demand issues and the acute student bed shortfall in the UK?
There are a number of headwinds at play and collaboration between private, public, central and local government will be crucial to alleviate the pressures and to unleash the incredible potential that lies ahead.
A recent survey suggested that 50% of students consider accommodation a critical factor in deciding where they will choose to study. The industry needs to be mindful of this and to play its role by not just focusing on bed ratios but also on choice and quality. Value for money is the main focus, not just affordability and headline prices. We fundamentally believe that PBSA providers should move away from a transactional relationship, where students are customers, and towards building transformational relationships with students, where they are treated as guests.
Why is ESG so important in the student accommodation market and what is true student doing in this area?
ESG was originally an investor-led phenomenon, designed to get student accommodation providers to deliver an institutional grade standard that has now been widely adopted and enhanced by developers and operators alike.
But far too many in the industry tend to wax lyrical about ESG because it is the fashionable thing to do, while only taking minimal action and superficial steps towards a more sustainable future.
We think it is very important to commit in a big way to ESG and ensure that ambitious targets are set and met. This is why we are partnering with Net Mission Zero and Planetmark to achieve accreditation and then challenge and engage our properties, people, and processes so we are improving and making a big impact progressively every year.
What will be the main objectives, priorities and ambitions for true student during the forthcoming years?
Beyond achieving our target of 12,500 beds by 2025, we want to continue to build on our mission to provide our guests with an experience they can’t find anywhere else, and to play an integral role in the most transformative years of their lives. We also have big ambitions for the true student brand and want to really capture the hearts and minds of students and prospective students, to become a household name among this generation. We will also be looking at how we can evolve true student into a global platform and potentially moving into other European markets.
