CAPITAL WATCH ISSUE 1 2018

undersupply of beds for London students. The London Plan suggests a need for between 20-31,000 additional student beds by 2025. Whilst the rationale for more PBSA development in London is compelling, significant barriers to growth exist, with historically high land costs and construction cost inflation driving up the cost of development. Furthermore, the Community Infrastructure Levy (CIL) on new development, the Mayoral Community Infrastructure Levy charge to fund Crossrail, and more recently significant restrictions to PBSA development in the new London Plan are making PBSA development more challenging in London. Amongst other requirements of the new London Plan, developers need to have an agreement with a university as part of the planning process, and a further 35% of lettable accommodation must be priced at “affordable” rates equating to a level at or below £155 per week. In the recent past, the prohibitive CIL costs and competition from other land uses has made student accommodation less attractive in Zones 1 and 2. This has opened Zones 3 and 4 to significant development, resulting in significant clusters such as Stratford, Wembley and Acton. These areas allow the delivery of studio bed spaces at just over £200 per week, considerably below the average London studio price of £303 per week in 2017/18. The onus is now on developers, investors and operators to explore innovation and thereby drive value. This can be through design evolution (design of rooms, communal space and amenities), new construction methods such as modular build, or leveraging technology to lower operational costs using smart building systems, customer apps or AI. How the private and public sectors can work together in London will also determine how developers and operators negotiate the new landscape set out under the London Plan. The London Plan suggests a need for between 20-31,000 additional student beds by 2025 CUSHMAN & WAKEFIELD 14 ALTERNATIVES