Empiric Student Property Trust, a serious contender in the UK student housing market

  • Overview of the student housing industry in the UK
  • Factors effecting the industry
  • Detailed analysis of the Empiric Student Property Trust


The growth of student housing industry is directly correlated with the growth of student enrolments in education programmes. There are more than 160 universities in the UK, including the top names such as Oxford, Cambridge, Imperial College, London School of Economics and King’s College. According to the Universities UK, an advocacy organization for universities, the nation is considered as one of the top choices by students followed by the United States for higher education. In 2015-16, 2.28 million students enrolled for the undergraduate/graduate programmes in the UK. The majority of these originated from China succeeded by the United States, Hong Kong and India.

The student housing industry in the UK is dominated by 10 players, the Unite Group is the largest student accommodation provider with approx. 50,000 beds in its portfolio (as of 2016) followed by UPP and Liberty Living. Additionally, Brookfield SRE and Mapletree are two new entrants in the industry (2016). 

Traditionally, student housing facilities were dormitory concentrated, which have a sharing arrangement. However, there has been a shift in the student preferences towards private student accommodations. Nowadays, students opt for calmer places such as single or twin sharing rather than flats which are mostly over-crowded. This led to the emergence of premium category student housing service providers.

Empiric Student Property Trust (ESPT), a relatively newer entrant in the industry grabbed the premium housing opportunity and capitalised on changing the trend in a very short span of time. ESPT was operating with 12 properties (1,556 beds) at the time of its IPO in June 2014. It has since then scaled its operations to 8,700 beds with over 89 properties by June 2017. The company focused on providing premium accommodation for the target segment of students, who were beyond their first year of study and fall under upper quartile income range and built a strong portfolio by acquiring developed or underdeveloped properties. The growth numbers of the company after its IPO were exemplary and the revenue rose by 160% in 2016 as compared to 2015. 

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Further, even though ESPT is a new player with a presence in the premium services category, it achieved an occupancy rate at par with the largest player in the industry, the Unite Group. In addition, ESPT has always fetched a significantly higher average revenue per bed than that of Unite Group as its portfolio is skewed towards premium accommodation. 

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Consequently, ESPT witnessed a sharp growth in its revenue at a CAGR of 90% during 2014-17 against ups and downs witnessed by the Unite Group in the same period. 

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ESPT’s operating profitability after being lower than that of the Unite Group’s in the initial expansion period surpassed after 1.5 years of going public and the gap is perpetually increasing. 

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Moreover, ESPT clearly identified the opportunity within the industry and strategically capitalised on the growth prospects, while outperforming industry leader on key operational efficiency metrics. It can be stated that ESPT has a scope for further property additions.

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Furthermore, taking into account the fact that the top 3 overseas student’s population are from developed economies, these students have better resources to pay a high premium for accommodations. This makes Empiric’s premium accommodations more attractive and the company may continue to operate at full occupancy rate in the near future. A change in student visa and immigration rules affects enrolments for the UK study programmes. The number of students from India dropped recently, but students from China, the United States and Hong Kong ascended. This was a positive sign for Empiric. There is also a speculation that Brexit can pose a major challenge for the student housing industry. However, Televisory believe that a decline in the value of the pound sterling due to British exit can turn the UK into an attractive destination for international students.

The growth of the student housing industry is also facilitated by the foreign investments. There was a huge increase in investments from Singapore in 2016. In addition, foreign investments grew from 35% (2014) to 64% (2016). The external market drivers and macroeconomic factors were favourable for premium category student housing and are a positive sign regarding future growth potential for ESPT and its offering for a particular segment of students. Further, ESPT is already optimally utilising its asset base, the future growth in revenue has to come through organic or in-organic expansion. Hence, all these factors will likely enable Empiric to make capital expenditures for organic growth and brand enhancement.

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