Yardi’s Richard Gerritsen hosted a panel alongside Duco de Jong from Student Experience and Dimitri Huygen from XIOR Student Housing to discuss the growth of student housing and how they are transforming and innovating within this asset class, which is still relatively young and evolving in Europe.
The Growth of Student Housing in Europe
Student housing has witnessed remarkable growth in recent years. The total volume of investment in European student accommodation in the first three quarters of 2022 increased by 130% year-on-year and stands at €11.7 billion, thereby setting a new world record and marking a significant shift in the landscape of housing management. Furthermore, according to Savills spotlight report, the number of young people (15–19-year-olds) in Europe is forecast to rise by 5.8% by 2027, which is driving strong investor interest in purpose built student accommodation (PBSA).
With this rising number of students pursuing higher education, universities and private investors alike have recognised the need for purpose built student accommodation that caters specifically to the unique needs of this demographic. De Jong highlights that if Student Experience puts “a room online today it will be gone within minutes.” But to “become a bigger player in Europe,” operators must transform from a start-up to a scale-up and tackle all the challenges that come with that. So, while there is more demand for student accommodation, businesses must consider “technology and sustainability” if they wish to stay relevant and increase customer satisfaction.
Huygen further highlighted, while the student market in Belgium and the Netherlands is very demanding and driven, it is not the case for all European countries. In fact, Huygen stresses that “a real push strategy is required in countries like Spain, Denmark or Poland” as vacancy numbers in student housing exist, so you “have to start being hospitality driven.” You cannot be laid-back and believe that these accommodations will fill themselves – as De Jong quotes, “the last thing we should be doing is relaxing and thinking all will work out, because there may come a time when it will not work out.” Huygen suggests that student housing providers “must start adapting to the market,” brainstorm and “ask the question of how we are going to do the go-to-market for Spain.” Thus, a combination of sales & hospitality experience and market knowledge is needed to grow in these European countries.
Customer Satisfaction: Putting People First to Encourage Growth
With a quick overview of growth established, starting off the discussion, Gerritsen asked the panel why they thought tenant satisfaction/experience is so important for business development and growth.
For student housing provider XIOR Student Housing, customer satisfaction is a central focus as it holds immense importance for their growth and continued development.
“I don’t know any company that doesn’t listen to their customer first before adapting a product for tomorrow.”
In an industry marked by a shortage of student housing, putting people first becomes essential. By prioritising tenant satisfaction and experience, companies can differentiate themselves from competitors and attract a loyal customer base. This customer-centric approach “is crucial to being able to take the next step” in growth. De Jong agreed and further pointed out how it is central for student housing providers to remain “proactive and agile,” when it comes to maintenance issues or student wellbeing.
Providers need to deal with student issues swiftly and improve their communication touchpoints if they wish to meet the evolving needs of students and help put parents at ease (when their children are living in student accommodation). However, Huygen stresses growth should not be viewed as an endpoint but as an ongoing ambition. Satisfied customers contribute to external growth by attracting new customers, and internal growth, through increased revenue per customer provided by qualitative staff members.
Furthermore, providers need to stay agile and proactive when trying to meet market needs/trends. This includes considering alternatives, such as flexible arrangements for their properties or diversifying target markets, to adapt to changing circumstances and maximise occupancy rates. De Jong emphasised this notion by sharing an example regarding Student Experience’s newest complex in Amsterdam, “which opened in the middle of the pandemic” and consequently experienced “a very low occupancy rate for a while.” However, by keeping an eye on the changing market and continuously asking the questions, such as “if we put a building here, which can theoretically house 600 students, can we then investigate alternative methods or arrangements when students go away for two months?” He highlights in Granada, Student Experience is “building right next to a hospital,” which came with “all sorts of possibilities” as an example. Huygen agreed with De Jong’s comment and highlighted, “in Spain, for example, you have 10-month contracts, so you have to cover the summer with other services anyway.”
By having that agility, proactive thinking and flexible approach in their business plan, Student Experience was able to secure long-term success as well as increase the company’s revenue in an unpredictable, everchanging market. While also enhancing customer/student satisfaction by building a consistent, connected environment across all their properties.
Technology as a Facilitator for Transformation, Innovation & Building Communities
With technology playing an important part of Gerritsen’s professional role at Yardi, he then asked the panel – “to what extent does technology play a role in what you do and what you want to do?”
De Jong’s response – “a very big role.” He emphasises how a unit cannot be vacant for more than half a day, so technology plays a very crucial role in that, but it’s also extremely important for streamlining processes and communication in “the various departments involved in housing management” at Student Experience. De Jong notes efficient handling of tasks, such as “contract terminations and room maintenance,” requires seamless coordination between the back office and front office, which can only be enabled by technology. But communication with students also heavily relies on technology, with interactive apps and fast email responses being essential for engaging with residents effectively. “If I look at communication with the student, everything revolves around technology, even writing an email. This must be interactive with an app on your phone – and it must be fast. So that’s where technology, for us, plays a very big role,” stressed De Jong.
Moreover, Huygen highlights that while the business case may revolve “around renting out rooms and providing services, the complexity, if you look at XIOR Student Housing from the eight countries, lies in scalability.” Technology serves as a key driver in achieving this scalability, but its success relies on people, as Huygen notes – “This is a people journey and to make it scalable, successful and efficient, technology is a large part of that. That is the key driver, but its success is decided by people.”
By leveraging technology to improve communication, enhance security and optimise operational costs, student housing providers can create a more connected and efficient living environment. However, it is crucial to remember that technology alone cannot foster a community. It requires the active involvement of local teams and residents to build meaningful relationships and drive positive change.
When reflecting on two years ago, Huygen shared with the audience his experience of starting XIOR Student Housing’s very first communication tool. He noted at that time “students could already solve a lot of FAQs about repairs and maintenance,” which resulted in repair costs going down “because the community user-generated FAQs were being solved by the tenants themselves.” This example, as Huygen quotes, might “regard very small issues, but it made the tenant feel a part of a community.” Thus, when people and technology become aligned, a powerful “snowball effect occurs,” propelling the transformation and growth of student housing communities.
Key Takeaways
Duco de Jong –
“In the Netherlands, you don’t have to worry, but in Spain, you really must work hard to fill up a student complex and flexibility in design can play a role there.”
“You must have a product that is as modern as possible and also possibly has an alternative to agility as an option.”
“Since everyone has their own studio in student housing, having that community is very important because, if you have that community and actively focus on that from time to time as an operator and gauge what’s going on there, you can organise events based on that.”
Dimitri Huygen –
“Technology is not going to instantly change tomorrow where we are suddenly going to find a community, it doesn’t work that way. It’s going to have to include local, real people and there you build an important relationship.”
“A technology project which is implemented is always dependent on people. If you want to build trust, clarity and alignment in your cooperation, then you have to make sure that you can actually start to draw a point there.”
“Demand is so high today but when that demand is not so high, you must research the market for that, you must be ready for that. But if you’re not ready for that or don’t have a go-to-market and sales experience, it will become extremely difficult.”
See how Yardi can help you drive growth in purpose built student accommodation (PBSA) in Europe.