Empiric reports robust rental growth amid rising student demand
Empiric Student Property says that demand for student accommodation in the UK has outpaced supply - and enabled it to push up rents by 10.5% last year.
The company, which owns and operates student housing at leading UK universities, is predicting rents will rise by another 6% - at least - for the next academic year.
Its financial results reveal that earnings grew by 2.8% to £14.5 million in the six months to June.
And, despite concerns about declining university admissions, the purpose-built student accommodation (PBSA) landlord remains optimistic for the sector's future.
It also reports that its halls are nearly fully booked for the upcoming academic year, surpassing 92% occupancy, for the third year running.
Growth of our portfolio
Duncan Garrood, the chief executive of Empiric, said: "It has been an active first half of the year with good progress made across the board, including the growth of our portfolio through acquisitions, the submission of planning applications and our successful refurbishments programme."
There were two notable acquisitions in Bristol and Glasgow, along with a comprehensive refurbishment of 173 rooms in Southampton, which have helped growth.
These developments propelled the company's portfolio valuation to £1.13 billion, representing a net like-for-like increase of 1.3%.
Empiric operates under the Hello Student brand, offering 8,000 beds nationwide and is known for its premium offerings - its most luxurious studios command rents of nearly £2,000 per month.
Also, international students will make-up 60% of Empiric's customer base in the upcoming academic year.
UK's student accommodation market
However, Empiric attributes its high occupancy rate to an imbalance between supply and demand in the UK's student accommodation market.
Factors such as higher mortgage costs, reduced tax relief and the need for eco-friendly upgrades have led to a drop in the number of private student landlords.
Also, increased borrowing costs and slower planning processes have limited the construction of new student flats.
To address growing student demand, Empiric has been investing in refurbishments and expanding its portfolio in sought-after university cities.
The company's focus on 'core Russell Group cities' has enabled it to achieve premium rental rates and maintain high occupancy levels.
Those cities include York, Manchester, Bristol, Edinburgh and Glasgow.
The landlord says it has sold PBSA blocks near 'secondary' universities, including Hatfield and Stoke.
Global Student Living Index Net Promoter Score
Empiric has also demonstrated strong customer satisfaction, with a big increase in its Global Student Living Index Net Promoter Score from 32 to 37.
This score surpasses the industry average for (PBSA) and University Halls by a wide margin – the average score is 14.
While concerns about university admissions potentially falling, particularly from overseas students, have been raised, Empiric says the reports may be misleading.
The landlord estimates that a big portion of the decline in international student numbers can be attributed to changes in visa regulations that no longer allow family members to accompany students.
'Demand for quality student accommodation'
Simon Thompson, the managing director of Accommodation for Students, said: "As the UK student population continues to grow, the demand for quality student accommodation is expected to remain strong.
"Empiric's impressive financial results and robust occupancy rates highlight the appeal of purpose-built student accommodation.
"The PBSA sector has demonstrated its resilience in recent years, weathering challenges such as the pandemic and economic uncertainty."
He added: "Student landlords with quality accommodation in the right places will continue to do well, particularly since students are looking to prioritise these offerings."
