With reduced student applications and places being cut, why is the University Sector the latest “honey pot” for the Construction and FM Sector?
The construction sector is viewed as a key barometer of the state of the national economy and in recent weeks we have had conflicting statistical messages, namely the ONS reported in April that output in the sector had shrunk by 3% in Qtr1. In contrast the Purchasing Managers Index (PMI) recorded an increase in April, with the Telegraph reporting the sector “continued to power ahead.”
When chatting to people involved in the Construction and Property Management sector at the frequent networking events I attend, the constant theme appears to be that they have identified the University sector as a key growth market.
It is an interesting shift in focus given the predicted impact on University revenues and student numbers, with the introduction of tuition fees. The Guardian reported earlier this year that it is anticipated that students applying for degrees will drop by 10% this year; the biggest fall since the 1970’s. ACAS later put the figure at 8.7%. The Govt have also announced University places will be cut by 15,000 this year.
Yet despite this, Wates Construction Group published a recent report which mentioned 79% of higher education institutions will carry out major (over £5m) construction projects within the next year, two thirds are making changes to accommodate more international and postgraduate students and a third are considering large scale commercial tie ups.
Ambitious Development Plans
Many of the UK universities have ambitious plans to develop their academic and residential facilities and the evidence of this is all around us:
- Liverpool University have implemented a £600m construction programme which includes £250 million being spent on renovating or construction new halls of residences.
- Downing Developments recently announced two student accommodation schemes in London and Cambridge worth £90m. In addition they are planning to continue developing in Leeds with a £40m scheme to create 568 student bedrooms.
- Vinci Construction currently have a £10m project in Liverpool, on the back of a completed £40m project in Birmingham.
Enhancing the University Experience
The basic rationale behind all of this activity is:
With students now paying for their own accommodation, their expectations of their “University experience” are increasing. They want value for money; good education facilities and comfortable and attractive accommodation. Indeed the University of Liverpool are another keen to improve the quality of their student accommodation and provide a “hotel style” accommodation service in their halls of residence.
Universities are keen to develop student communities, by attracting them to a more campus based environment for the duration of their studies. I attended a recent event where John Brooks, Vice Chancellor of Manchester Metropolitan University, spoke about their ambitious and market leading plans for the development of their campus along these lines.
At another event last year, Mike Kelley of the University of Liverpool mentioned that they were “targeting foreign students, especially from China”. The Brown Review, the introduction of tuition fees and increased competition between Universities, combined with greater private sector involvement (Ocon, Downing, Vinci, etc) has been the catalyst for a great deal of activity in the sector. Ed Naylor of Liverpool John Moores University also commented that the quality of the accommodation has moved away from “shared facilities” and more “self contained studio living.”
The clear sign appears to be that construction and the subsequent management of these facilities are continuing with an unrelenting pace at present, despite gloom in other areas of the economy. It would a brave politician how would point to what is happening and argue that the introduction of the tuition fees is actually a really good thing and been the catalyst for activity in this part of the economy.
Despite the costs involved these are exciting times to be a student and to be working in the University Construction and Facilities Management sector. Indeed it has come a long way from my experience of a £16 per week grotty room in Wolverhampton twenty years ago and many students should be glad and raise a glass of snakebite to that!
(The views expressed in this blog are my own and not those of my employer).