Take a pause on your new development…
The rise of online learning schedules has seen students spend more time in their accommodation than ever before. And that trend translates to the BTR sector, where more and more tenants are under remote and hybrid working agreements, spending more time in their flats and even more time using on-site facilities.
In response to these trends, we are consistently seeing announcements of new developments in PBSA and BTR. They mostly boast all impressive new facilities such as cinema rooms, gyms and concierges. We can’t argue that these are great assets. They’re attractive to investors and potential tenants, and of course they add a nice little ego boost.
But we need to be careful here. Are we losing sight of the market needs and demand?
The pandemic shocked the population to the core. And the economic impact is likely to be felt for years. It is affecting price points, affordability and the values of the modern customers.
Many landlords and investors are at risk of getting lost in the superficial. What do audiences actually need - and can actually afford?
Things are changing rapidly. And as a result, new data needs to be gathered to inform new direction within the PBSA and BTR sector.
The Property Marketing Strategists latest research, in partnership with UPP, has looked into what Gen Z really want from their living environment. The report not only documents results from current students and recent graduates about their living experiences, but also takes into account views from 16–18-year-olds about what they consider important for their first home.
This data gives the industry a real insight into what Gen Z want from their future homes, focusing on; affordability, sustainability, wellbeing, technology and community.
Where are things now?
The commercial property market saw negative returns in the wake of the covid pandemic, but as research shows, things are on the up for PBSA and BTR.
The residential market was up 10% last year, driven by demand of investors seeking inflation-linked rental, and with anticipation that demand will remain strong through 2022, investors and landlords are plummeting funds into exciting new developments and facilities. But, at the risk of playing devil’s advocate, are they actually needed, or even wanted
Research from 2021 has revealed that overall, there is a growing satisfaction with PBSA. As our review of the Accommodation Costs Survey 2021 points out, there has been, one of the biggest factors has been affordability. This is arguably where landlords should be shifting their focus. If it’s not broken, what are we trying to fix? Instead, explore ways to improve affordability and offer greater value for money.
A focus should also be on academic and personal development - rather than social. This has been evident in much of our research. A lot of the ‘swanky’ new facilities we are seeing are not always purposeful in those regions and do little to nurture the academic and professional needs of the tenants.
You may find our Youth Forum results useful when assessing the PBSA market in particular. Recent discussions during these focus groups have alluded to the need for better customer service, higher response rates, and working spaces that are conducive to both private and shared study practices.
Whilst there is without a doubt a market for higher end facilities and a more competitive package, it’s important to identify the real needs of your market before you invest in such expenditure.
DATA-DRIVEN INSIGHTS
Maximising data-driven insights will help to drive the direction of your facilities. Here are some areas of focus for when conducting any of your own research. Communicating with previous occupants and observing how they interacted with facilities will be integral to identifying whether this demand is there. Questions for consideration may include:
Is there a need or expectation for new facilities?
If so, how will this impact the price point?
Can the demographic afford it (the actual demographic not the target demographic)?
Are the facilities needed or is it being built in an area where that already exists and would support the community and local economy?
Is it future proofed in line with the local area plans, not to mention technology and sustainability?
Does it offer product differentiation to what is already there? What gap are you plugging?
Future-proofing your model
As mentioned above, future-proofing your model is essential in today’s climate. With rapid changes to technology, the proliferation of sustainability initiatives and local area plans to support these, where does your model sit?
As an example, with the move away from diesel and petrol cars, there will be a higher demand for electronic changing points. But if new facilities have overtaken the space or budget to build these, how can you be sure you have future-proofed in line with the audience's requirements?
Or perhaps the opposite is true, and one of the new assets you offer is 50 new charging ports. Do you have the data to validate the need for that many? If you are in a location with good local transport networks, this may not be needed at all for now or the near future. Ask yourself before you jump into new developments - did you promise a return to the investor based on % occupation at a price point, and now you have to deliver? Or is there a trend arising among demographic research which is naturally leading you towards filling at a lower pricepoint?
The Property Marketing Strategists’ was created with the intention of elevating strategic marketing in the property sector. Continuously gathering and analysing both qualitative and quantitative data allows us to understand the market at a deeper level. With a bigger focus on research than ever, we urge you to invest some time in research - whether that is conducting your own or gathering from external sources. Once you are clear on who your actual audience is (not just your target audience), your actions and investments will become more purposeful, intentional, and successful.
More information about all of our research can be found here.