Dan Smith urges PBSA execs in the U.K. and internationally to make changes in response to evolving demographics and the lack of affordable housing: “We have to do it now”

Dan Smith has a jolting message for the PBSA industry, especially in the U.K. By 2026, the U.K. will have a shortfall of 500,000 beds, while the current rate of building is delivering only 10,000-15,000 beds per year.

"So we are making a dent on that sort of pipeline," cautioned Smith, who is Managing Director at Student Housing Consultancy, about the state of the student housing crisis in the U.K. Smith contributed to SHURE GTA, an international university planning and student accommodation event held in Toronto on November 16. The SHURE Initiative organized the event.

In addition, student demographics are rapidly changing in the U.K., with a rapid rise in the number of U.K. domestic and Indian students. Admitting that the U.K., while the most mature PBSA market internationally, has become 'complacent,' Smith said the industry must evolve and plan for the next 20-30 years.

But Smith's warning extends beyond the U.K. to developers and investors in other G7 countries and the Eurozone. According to Smith and industry experts who spoke at the event, demographics are rapidly changing – and the industry must plan for Indian student domination. This change will require a new way of designing PBSA, from the number of beds per unit to re-configuring bathrooms.

"We have to think about innovations; we have to think practically about what it means to make sure that students have a good experience at an affordable price, and we have to do it now," Smith cautioned the SHURE audience.

According to Smith, the solution to challenges in the U.K.'s PBSA arena is often to take on more international students. "The universities can make three times the amount of tuition from an international student than a domestic U.K. student."

At the same time, Smith said that despite university systems' dependency on international students, there needs to be more interest at the U.K. federal or local government levels regarding what types of services and special attention they require.

Chinese students in the U.K. are typically post-graduate students and prefer to live in studios. Smith described students from China as demanding, and the PBSA industry has been responding to their needs and available capital for housing in recent years. "And that's what we've built in the U.K., PBSA studios as a product for at least the last five-to-six years."

However, the enrollment trend in the U.K. is an increase in domestic students and like many other G7 countries, a rapid rise in the number of Indian students. "And that number of Indian students is pretty dramatic regarding where they're up. They're now pretty much level at around about with China," according to Smith.

However, the PBSA consultant cautioned investors about Indian students' spending capacity - especially for housing. According to Smith, Indian students prefer en suite apartments and cohabitation with others. "Indian students have very different wallet sizes, and it's around 60 pounds or 75 USD per week less than Chinese students."

Smith discussed the impact of rising U.K. domestic enrollments and their unique accommodation needs, particularly on the apprenticeship front, in addition to the challenge brought by Indian students. "We have an interesting sort of split because we have more and more apprenticeships coming on, and the U.K. government is looking for apprenticeships too."

Despite his straightforward remarks about the need to design new housing for students, Smith was sympathetic to developers facing inflation and rising interest rates and effectively managed with tighter margins. "What we need to make sure of is that we have enough affordable stock in the U.K. However, it is not easy to build and get funding right now."

The innovation Dan Smith wants to see:

"It is very much looking at how many beds can we get in a room, practically, so that there is a certain level of privacy because we've seen there's been a sort of flight away," said Smith, who noted that twin rooms became challenging to sell, especially during the recent pandemic.

Smith made a point about the number of beds in a particular set at the expense of the communal space. "We know how important it is to get students out of their rooms and focus on that resident experience."

Smith concluded his remarks with a message about affordability in the PBSA arena. "Affordability is something that we need to get back."