Private sector is providing bulk of new accommodation

STUDENT accommodation is big business, with private firms pumping hundreds of millions of euro into developing bed spaces, and charging students a premium.

But is the Government handing over provision of student bed spaces to the private sector at the expense of providing other housing types, shoring up problems for the future?

The National Student Accommodation Strategy calls for 21,000 spaces to be in place by 2024. Despite the Higher Education Authority suggesting that students who live on campus tend to stay in college and achieve higher grades, most of the new developments are private schemes, off-campus.

Between 2016 and June this year, 17,401 bed spaces were either newly completed, under construction or had a grant of planning permission. Just 3,702 units, or 21pc, were developed by third-level institutions.

Generally just bedrooms with an en-suite bathroom and shared living accommodation, the lucrative returns could have an impact on provision of apartments, architect Mel Reynolds says, which are badly needed to serve the housing sector.

Eight student bed spaces can be provided in 150 square metres, which is the equivalent space utilised by two small two-bedroom apartments. If a bed space is rented for €1,150 per month, that suggests a monthly income of €9,200.

If two two-bedroom apartments were constructed in the same space, the developer would need to rent them for €4,500 per month to generate the same returns.

Student units are cheaper to build because there is no requirement for parking or balconies, there is no need to offer 10pc of completed units for social housing and there is no limit as to the number of units per floor served by a lift, unlike traditional dwellings.

“The site value and building value are dependent on the rental income,” Mel Reynolds says. “The higher the rent, the higher value is attached to the land. This is a policy initiative from Government. It means you’re making normal long-stay less valuable. It’s blowing site values out of the water for adjoining residential.”

There are also concerns about the impact large-scale student schemes have on existing communities, not just around night-time noise but also in relation to the impact a transient population has on a settled area.

While the Government hopes to boost the number of international students studying here, what if they don’t come? Will these units remain idle, and perhaps become unsuitable homeless accommodation?

The race to source accommodation has been under way since the Leaving Cert finished, and will intensify as CAO offers land. Only time will tell whether the current approach helps lower rents, easing pressure on the rental market, or merely fuels private profits.

‘You’re making long-stay less valuable. It’s blowing site values out of the water’