Marc Sampietro, Head of European Living Operations, Hines contributed thought leadership to SHURE in Zürich
It’s quite a challenge because we’re living today with all these wars worldwide, which is not helping. Because of construction, utilities, etc., the cost increase is becoming a huge topic. To maintain your operations at a certain level, it’s also true that from an investor side, there is a little bit of risk on the way we are leasing the buildings because if you are managing, for instance, offices or retail, you have one deal done in maybe they will stay for 4 or 5 years. We have an average of 500-700 rooms per property, which you must fill annually. We have short lease windows; you are done if you lose those. Operations and turn are the biggest challenges from an investor’s point of view. If you ask me as an operator, the challenge is the day-to-day operation of managing those 700-800 students at the same time. It’s also true, and I’m coming from the hospitality industry, that the main difference is that in the hotel, you have an average stay of 1 to 5 nights per guest. In student housing, you have around ten months on average. Maintaining our business’s expertise to get these guests’ satisfaction is a challenge. In Spain, Italy, or Portugal, location is critical in our challenges when looking into new properties.
Now, if you have the right location, this would allow you to get many more students for sure, close to universities, if we are talking about Barcelona, for sure, the beach, so all those kinds of things are supporting us to manage better and to have better leases and higher prices.
How the PBSA Opportunity is Growing in Southern Europe
The student housing concept was much more famous and popular in northern Europe. That’s why we are starting to go to the south to focus on those countries, because at the moment, at least in Spain, all the student housing is around. Finding a property was difficult, and they needed to be managed better. Most of the students are coming from religious institutions. So, imagine the concept has been completely changed in this country thanks to a new student housing concept. Having this formula of all-inclusive, sometimes we are accused that we are higher prices on PBSA, and I do this count not every day, but so many days, if you split the cost of what we are asking for a monthly rate, and you go by your own to an apartment, and for sure you want to go to the gym, you need transportation, and you don’t have much stuff, for instance, security.
You don’t have the commitment and the community you are creating with those students to meet people from around the world and a swimming pool, a library study area, external outdoor and indoor activities, an agenda of events that allows the student to connect and create this community.
Ultimately, being alone in an apartment is more expensive, and you must consider that we have two guests. One of the students, but the other one is the parents who are paying the bill. And if you ask for parents, they will undoubtedly ask for security and cleanliness after COVID. Cleanliness has been the top priority for parents.
I think we all agree that for 18 years old, imagine that those students are the first and that they leave their parents, they leave their house to be alone in an apartment, maybe it’s not the best solution because they never cook, they never clean the house, so probably it will be a mess as it is. But this new concept of PBSA allows to at least to support the students in this vital part of their lives, that they start to begin as individuals and grow as a person, so I think it is the big difference that we have between an apartment with no services and no security with what we’re offering the student housing today.
Growth Markets
I’m not an investor, but as an operator, Madrid and Barcelona are poised to grow. Madrid has much more space to grow, even if it’s much more challenging to find the right look at the right location on the right plot or the suitable building to make the refurbishment.
Second destinations are indeed growing. I know that Seville is growing, and Malaga is. Many universities with a good quality of education are growing, including Valencia. So, I will not only look for a primary focus in Madrid and Barcelona but also as a second destination.
Related SHURE Initiative Event: SHURE: INTERNATIONAL OUTLOOK & INDUSTRY COLLABORATION | WASHINGTON, D.C. | 9 MAY
– Summary comments from MARC SAMPIETRO, Head of European Living Operations, Hines contributed thought leadership to SHURE in Zürich. at SHURE Initiative in Zürich.
