The housing crisis is a hot topic not just in the property industry but across society as a whole. A report from the House of Lords Economic Affairs Committee said that the UK government needed to boost its homebuilding target by 50% to create 300,000 new homes each year to tackle the housing crisis.
Student housing markets in continental Europe are catching up with the UK, just as Brexit uncertainty hovers over the 2019-20 academic year.
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Over recent years, the UK has started to take mental health seriously, and with good reason. Some say we are living through an epidemic of loneliness. 2017 saw Prime Minister Theresa May appoint MP Tracey Crouch as minister for loneliness, after studies found that more than 9 million adults in the UK are either always or often lonely. Months later, MP Jackie Doyle-Price was named as minister for suicide prevention. UK suicide rates have dropped in recent years, but it remains the leading cause of death for men aged under 45.
A way to tackle this problem is to increase opportunities for social interaction through the development of communities. As developers, we can aim to build these opportunities into new schemes, allowing residents to gain that sense of belonging, of taking part, and engagement, that will ultimately result in increased mental wellbeing.
The burgeoning Build to Rent sector has an opportunity to contribute. The essence of a successful Build to Rent development is enabling residents to see their rented homes as a long-term option. Developers aim to do this by attempting to build a sense of community and belonging into their schemes.
Amongst other features, there is a focus on high quality, flexible amenity space. These spaces provide regular opportunities for residents to meet and take part in activities together. There is also proactive management by an on-site team, including the organisation and supervision of community events. Training can be provided to ensure that the team spends just as much time on the welfare of residents, ensuring they are happy and feel supported, than on ensuring schemes are operationally efficient.
The diversity of the Build to Rent’s target market also provides opportunities to address issues. The resident body of a Build to Rent scheme can be made up of everybody from young people, through to families, and on to older people who have reconciled with renting. This diversity offers a greater range of experiences, of feeling part of something bigger, and of connections being made between generations. This is a true community.
Developers in other sectors may not see as much opportunity to contribute as those in Build to Rent, but there are still initiatives to be taken. Even simple design specifications can help create an environment that supports mental wellbeing. For example, ensuring the availability of sufficient natural light in units, sound-proofing to minimise the impact of noise, and good provision of green spaces can all go towards improving the mood of residents.
Building in design efficiencies allows developments to perform and function in the best possible manner. Without considering efficiency, buildings produce waste for the developer in the shape of underused or dysfunctional space, and waste for residents in the shape of time lost or a problematic living environment. Developers must consider efficiency from the start of the design process and constantly check back to see if they are meeting good standards. Below are three handy questions developers should be asking themselves to gauge efficiency standards in the design of their buildings.
Is there any wasted space in the building?
The spaces in a building should add value. If they don’t they are a waste. Value is easy to quantify in terms of rentable space, but what about your amenity, ancillary, and transitory spaces? Is that amenity space really going to make people want to live here? What secondary use could we get out of this corridor other than just allowing people to get from Point A to Point B?
Does the design help the building function as it should?
In residential development, the primary function of the building is to create a positive living environment for residents. This can be achieved through, amongst other things, efficient use of space allowing for good levels of convenience and comfort. Developers must ask if their building design is intuitive. Does it allow residents to move around it easily and are key shared areas easily accessible to all?
Is there flexibility in your design?
One of the best ways to allow for efficient use of space is to enable spaces to have multiple functions. These functions will be different for each space type. For example, an amenity space functioning as a shared dining area could easily be adjusted to provide a meeting or work space. In apartments, flexibility means that the space could be used by various demographics and tenure types. Could a young family live just as comfortably in one of your 2 bed apartments as a couple of young sharers?
Author – Patrick Crowe – Planning and Research Manager – 24th July 2018
- Amro seeks joint venture partner for €300 million capital investment targeting student housing opportunities in Spain and Portugal
- Opens office in Madrid to manage rollout plans
- Announces first investment in Granada, Spain – a 360-bed property that will open in 2020
Amro Real Estate Partners, the specialist student housing and build-to-rent investment and asset management business, is expanding its reach across southern Europe to capitalise on the potential of the purpose-built student housing market in Spain and Portugal.
CBRE Spain have been appointed to seek a joint venture partner for a capital investment of €300m to access the full potential of the market in Iberia. Amro has ambitious plans to create a 5,000-bed investment platform spanning the Iberia region through development, refurbishment, forward purchase and acquisition.
To help drive forward its expansion, the investment firm, which has significant experience of developing and operating student accommodation and build-to-rent assets in the UK, has opened its first European office in Madrid, Spain.
Amro has also acquired its first property in continental Europe, a development site in Granada, Spain on which it will develop a 360-bed student housing scheme to open in 2020. A strong pipeline of further transactions has been established with around 3,000 beds currently under negotiation, of which 1,300 are under exclusivity across both Spain and Portugal.
The Iberia region has more than 1.8 million students yet only 97,000 beds. Competition in the sector is limited with much of the available product run by religious orders or public universities that is of substandard quality and often poorly managed.
Raj Kotecha, Managing Director at Amro Real Estate Partners, commented:
“The student housing market in Southern Europe shares characteristics with the UK student housing market of 10-12 years ago with demand for purposed built accommodation significantly outstripping supply and competition from professionally managed schemes being limited. This is a market still very much in its infancy and we believe our entry timing is ideal. We have an ambitious and well formulated investment strategy with a strong pipeline of schemes underway. Working with a joint venture partner who shares our perspective on the market opportunity will allow us to execute this strategy with speed.”
Amro’s Iberia pipeline spans ten cities that are home to some of the best universities in southern Europe including Madrid, Barcelona, Valencia and Lisbon. Amro will undertake new build development as well as the modernisation of existing student housing properties in order to deliver the same, high-quality product as it develops in the UK. It will be working with experienced local partners to help ensure successful delivery and management of its properties in the region.
The Amro management team has been involved in the development of over 20,000 beds in the UK student housing sector.
Amro Real Estate Partners, the real estate investment and asset management business, has expanded its senior management team with the appointment of Marcus Adam as Development Director.
Marcus will be responsible for the development and delivery of Amro’s projects across its specialist areas of student accommodation and build to rent.
Marcus joins from University Partnerships Programme, where, as Construction Director, he was responsible for successfully delivering the multi-award-winning Garden Halls project for the University of London, setting new standards in the provision of student accommodation by the university sector.
Marcus brings over 20 years of construction industry experience in leading and managing project delivery. A graduate of the University of Greenwich with a degree in Design and Construction Management, he is also a member of the Chartered Institute of Building.
Marcus Adam, Development Director at Amro Real Estate Partners, said:
“I am hugely excited to be joining such an ambitious and innovative firm. Amro Real Estate Partners is a dynamic business with a strong track record in developing and operating high-quality student accommodation and build-to-rent schemes in the UK, and I look forward to working with the team as it implements its significant growth plans.”
Raj Kotecha, Managing Director at Amro Real Estate Partners, added:
“Marcus has a strong reputation for developing exceptional student accommodation schemes and we are pleased to be welcoming someone of his calibre to our business. As we look to expand, with a number of new projects in the pipeline, Marcus’ expertise in leading and managing the delivery of new developments will make a major contribution to our ongoing success.”
According to recent research (Feb 2018) from Savills the UK’s Build to Rent (BtR) sector continues to progress rapidly, with c. 104,500 units currently in the sector including 19,000 completed, 27,500 under construction, and c. 58,000 in the pipeline. Given the major shortfalls in the UK’s housing stock, the sector offers substantial potential for medium to long term investment.
What are some of the current challenges facing Build to Rent?
A Nascent Sector in its initial growth stages..
Whilst the US has a very established Multi-Family Housing sector, the equivalent BtR sector is relatively new in the UK. The lack of data on mature assets creates an additional element of risk for investors and developers. The only long-term data available is from the Buy-to-Let sector, which is rather fragmented, and tends to have different investment characteristics from purpose-built BtR assets.
The existing planning framework..
Currently planning guidelines and regulations for BtR developments are mainly based on the C3 (residential) use class that is associated with all new developments in the residential sector which includes the For-Sale sector. There are significant differences in the design and the delivery of housing in the BtR and For-Sale sectors that current regulations do not recognize. As a result, the lack of flexibility on such parameters such as unit mix, space standards, design, and parking could hamper the growth of the BtR sector. The draft New London Plan attempts to recognise some of these differences that should ultimately follow through into national planning policy.
BtR’s operating costs…
A fully managed building is one of the key features of BtR schemes. It is expected that as the sector becomes established, assets with good quality, hands-on management will trade at lower yields than those that do not have a good management strategy. US experience illustrates the sensitivity of long term yields to management/ operating costs, and it is crucial that we recognise this from the outset in the UK and ensure that our assets have built-in efficiencies from very initial design stages.
Please come back to peruse next month’s article on Building in design efficiencies…