London: The Knowledge Economy
Plans are underway in London’s health and education community to redevelop their estates for clustering, collaborating and public improvements to compete with the far east and other countries. One of the biggest obstacles is the lack of investment for affordable housing for workers and student accommodations in a survey by New London Architecture (NLA).
In a recent keynote address University College London (UCL) Professor Alan Penn. Professor in Architectural and Urban Computing spoke of London as still the most attractive choice for students despite issues of affordability. But when it comes to research and development he says the UK has been ‘coasting along’ when it comes to GDP compared to the countries of China, Germany and Korea. While UK scientific research is often quoted in international journals these other countries are gaining ground.
In an effort to meet the competition from the United States the London School of Economics director of estates Julian Robinson said the LSE, with its 1.6msqft of real estate has two main tenets in its plans. The first is to establish a ‘world class’ series of buildings saying when he arrived in 2005:
‘The quality of the estate was quite shocking. Some described it as shabby chic. I just called it shabby.’
The new vision is to bring forth an ‘academic quarter’ in Aldwych by 2020 with new LSE halls for residences.
Plans for a new £125 million ’unique piece of architecture’ called the Centre Buildings, designed by Rogers Stirk Harbour and Partners creating a new public square, and ‘quid pro quo’ of a 13-storey tower.
An additional investment is the £142m Marshall Building by Grafton Architects, to replace the Cancer Research UK before it moved to the Crick.
Also bringing new life to its estate is Kings College described as being ‘dilapidated’ by real estate developer Ralph Luck. Plans call for new student residences including at Canada Water by designers Allies and Morrison, with the hope of changing the image that London is ‘one of the most unaffordable cities for students’.
A survey conducted by NLA for increased growth for London’s Knowledge Economy showed that :
‘...a lack of affordable housing for workers and students was the main challenge facing the growth of London’s Knowledge Economy, followed by a lack of available land and spaces.’
Other priorities by respondents included improved existing buildings and better transport infrastructure.
The Business of Student Housing
Whilst London works to ease the student accommodation issue with its Knowledge Capital expansion nationally the student housing sector continues to grow. As a result of a weak pound the UK leads the European investment market for student accommodation.
Student housing innovation and investment in Britain was at £975 million for the 1Q of 2018 and £4.68 billion for all of 2017 in a report by CBRE. it is reported that in a review of 201 schemes with 58,883 bed spaces brought a return of 9.58% in the 12 months to 30 September 2017 and a national average rental growth rate of 2.8%.
Jo Winchester, head of student accommodation at CBRE says in PropertyWire:
‘Student accommodation continues to perform well, attracting large scale investment from all types of investor, but with the market dominated by larger operator purchasers and portfolio sales.’
‘The desire for cheaper accommodation is beginning to drive innovation in room types and hybrid operating models. In terms of construction, we are seeing creative alternatives to the classic en-suite layout which are both cheaper to rent and cheaper to build, we are also seeing the return of modular construction methods.’
‘The potential for rental growth remains good and the general shortage of investors compared to opportunities tends to support values and the market overall is improving, especially in London and prime regional towns.’
Just announced are plans for Peter Everest, a director in Rothschild’s global advisory division to lead a team advising the £400 million investment in the UK student accommodation market by Arlington Advisors for their UK Arlington Student Accommodation Fund. Its current holdings include 8,000 student beds across 15 properties in London, Birmingham, Leeds and Manchester.