SPOTLIGHT ON STUDENT ACCOMMODATION FABBY ERNESTA 22 SEPTEMBER 2015
MARKET CONTEXT SUPPLY V DEMAND Supply Side: 1. Significant shortage of affordable supply Current student beds supplied account for less than 10% of total student beds demand The private rental market accommodates approx. 70% of students because of lack of suitable supply More than 80% of student complaints are about private rental market accommodation that is not suitable and typically unsafe 2 MARKET CONTEXT 2. Need for Student Consumer Protection International students are seeking higher levels of safety and security for their accommodation 63% of international students chose branding as their key determinant for where to stay 3. Education industry legal compliance Federal Government in Australia now imposes a legal duty of care on Universities to provide safe accommodation for students studying in Australia problem is that there is currently insufficient supply and there is no control over the private rental market
MARKET CONTEXT SUPPLY V DEMAND Demand Side: 1. International enrolments are increasing Australia can expect an additional 117,000 international students by 2020 a 30% increase 2. International Students mobility globally is increasing The number of International Students studying outside their country of origin has doubled from 2.1m to 4.1m between 2000 to 2010 and expected to exceed 7 million by 2020 3 MARKET CONTEXT 3. Australia is now in the top 3 destinations globally Australia s market share has been increasing since 2000 4. Asia currently accounts for 80% of Australia s international students The increase in international students globally from 4m to 7m by 2020 is expected to come mainly from Asia s growing new middle class Chinese students chose Australia as a preferred destination with China now accounting for 40.2% of international students up from 28% in 2012
MARKET CONTEXT BRISBANE Brisbane continues to stand out as a location for education. In the latest QS ranking, Brisbane was the 23rd best student city in the world and had one of the highest student ratios of any city in the top 30. 4 MARKET CONTEXT Brisbane ranked highly as a destination, offering a mix of urban and outdoor lifestyles Education is the largest single services export in Brisbane and contributed approximately $3.8 billion to the local economy is 2014 75,000 international students in Brisbane The average international student spends in excess of $125,000 over a three year period whilst in Brisbane creating more than 20,000 full time jobs
WHERE STUDENTS LIVE IN 2015 EASTERN SEABOARD 5 MARKET CONTEXT
BRISBANE PIPELINE 6 MARKET CONTEXT
BRISBANE PIPELINE Brisbane and Melbourne have the most significant pipeline development with 8,661 and 6,856 beds respectively. Pipeline proposals are at various stages of development with some at an early stage of feasibility. 7 MARKET CONTEXT There is a strong probability that some of the proposed development may change significantly or may not be delivered at all. Even if all the proposed development in the pipeline is delivered in Brisbane, the total supply will still be at 13.55% of existing full time students Provision at this level compares favourably on an international basis to the more mature market of London which currently has 27% PBSA provision. The analysis is based on todays student numbers and taking into account that student numbers in Australia is expected to grow during delivery of the pipeline accommodation
BRISBANE DEVELOPMENT PIPELINE BY STAGE 8 MARKET CONTEXT
BRISBANE DEVELOPMENT PIPELINE BY STAGE 9 MARKET CONTEXT
BRISBANE DEVELOPMENT PIPELINE - CHALLENGES 10 MARKET CONTEXT A key challenge facing student accommodation development is the feasibility against other land uses and planning regulations. Feasibility of new development is a key barrier to entry as key locational requirements for student accommodation of align closely with residential developments. The development cost associated PBSA is also a barrier to entry Funding
BRISBANE DEVELOPMENT PIPELINE - INCENTIVE 11 MARKET CONTEXT Brisbane City Council has been proactive in its approach to student accommodation with the introduction of a temporary reduction in Council s adopted infrastructure charges for student accommodation developments within a 4 kilometre radius of the Brisbane GPO. Queensland Urbane Utilities (QUU) has also introduced a new infrastructure charge category for student accommodation developments. The combined Council and QUU infrastructure charges for a one bedroom unit has reduced from $18,000 to $4,560 a saving of $13,440.
THE IMPORTANCE OF A SPECIALIST STUDENT ACCOMMODATION OPERATOR Key elements of student accommodation Location Building the right product Asset performance o Average room rates o Occupancy o Outgoings Marketing Domestic & Overseas Relationship with education providers 12 KEY ELEMENTS OF STUDENT ACCOMMODATION Customer service Ongoing operations Sustainability
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Pre-opening Services Advice on site selection Feasibility Assistance with valuation and funding 13 PRE-OPENING SERVICES Input into design specification Preparation of the operating budget Staff recruitment and training Leverage existing relationships with the local education providers and international agents
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Pre-opening Services Procure and commission other onsite services such as telephone, internet and premium TV services, laundry services and vending machines. 14 PRE-OPENING SERVICES Establish the office and administration systems as required to effectively run the premises from opening day Establishment of the property management system Preparation of student life activities Marketing
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Post-opening Services Marketing Booking Property & Facilities Management Services 15 POST-OPENING SERVICES Management of contracted services such as internet, premium TV, washing machines etc. Letting & Resident Management Services Security Risk Management Student Life Experience Critical incident and emergency
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Marketing Real estate marketing and traditional channels doesn t work 16 MARKETING Timing is important Booking system Electronic marketing including Domestic & overseas marketing Relationship with education providers and stakeholders Promotions and events including on and off campus promotional activities Facility familiarisation
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Property & Facilities Management Services General care and management of the property Ongoing maintenance Life cycle and preventative maintenance Provide a 24 hour service to the residents including a live in on-site caretaker/manager Operating Software Administration and record keeping including maintaining and updating the operating cash flow budget 17 PROPERTY & FACILITIES MANAGEMENT SERVICES Reporting & Relationship Management
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Student accommodation providers have a duty of care to provide a safe and secure environment for all students to enhance their student experience. A secure student accommodation is providing students with the freedom from the risk of harassment, intimidation, robbery and assault and increased feelings of safety. International students may be especially vulnerable by being away from their own home support networks in a new country and can face higher safety and security hazards than their domestic student peers. 18 PROVIDING A SAFE AND SECURE ENVIRONMENT
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Standard policies and procedures manual with OH&S, insurance requirements, preventative maintenance etc. Fire compliance 19 RISK MANAGEMENT Asset Due Diligence Business continuity and planning o Disease outbreak o Insect infestation o Power outage o Operating system o Communication protocol in an emergency Ongoing staff training
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR Designed to ensure that students have a positive experience while they are studying. It is important that the connections & friendships that are made as a student on and off-campus can last a lifetime Residential life programs must be designed to not only showcase available recreational & social activities, but also includes arranged activities to foster friendships & support throughout our student community as well as enhance their growth academically and professionally 20 STUDENT LIFE & EXPERIENCE Leads to student retention and academic success Residential life program as a risk management strategy
SCOPE - SPECIALIST STUDENT ACCOMMODATION OPERATOR A critical incident is any event or business continuity issue that significantly threatens the commercial position or operability of the student accommodation building. Critical incidents will involve all or a substantial part of the accommodation building. Critical incidents require a coordinated operational response that deals with control of the emergency situation and the restoration of normal business operations. Categorised as follows: o Level 1 is for minor incidents. At this level the situation is not required to be escalated further and capable of management by our in-house response team. 21 CRITICAL INCIDENTS POLICY o Level 2 is for moderate incidents. At this level the situation may pose a threat to off-site areas. Significant response by emergency services and external reporting is required. o Level 3 is for critical incidents. The situation is not under control and protective actions by external entities are necessary and ongoing.
SPECIALIST STUDENT ACCOMMODATION OPERATOR An integral part of managing emergencies is to be prepared at any given moment and to have structures in plac to manage the emergency. 22 EMERGENCY Important to have an emergency response group for this purpose. The group is a structured group of people who are prepared for and manage an emergency in a building as required with various skill sets. The core group is responsible for all regions and leverages localised PAD resources as required. The groups is led by the Chief Operating Officer and supported by Senior Operations Team.
SUMMARY Market Knowledge o Location o Design & Specs o Feasibility Marketing o Relationship with education providers o Overseas recruitment Operating Expertise o Professional management with minimum standard o Resident management o Facilities management o Critical incident and emergency Sustainable investment 23 SPECIALIST STUDENT ACCOMMODATION OPERATOR
SPOTLIGHT ON STUDENT ACCOMMODATION FABBY ERNESTA