Unreal estate

Why Is So Much Student Accommodation Going Up?

A reader asked us why there is so much student accommodation being built in Dublin: “I’m curious as to why this is happening … suddenly there’s a load of it. Is it EU grant led?”

There certainly is a lot of student accommodation going up in the city. However, this trend does not seem to be EU-grant lead. It seems to be profit-led.

Owners of purpose-built student accommodation generally charge higher rents for smaller spaces than do regular residential landlords.

But students – or, more likely, their parents – are willing to fork out for it. There’s a perception it is safer, and of better quality.

It allows students to avoid the “bear pit that is the Dublin rental market”, says Lorcan Sirr, lecturer in housing at Dublin Institute of Technology.

“It is not cheap to live in bespoke student accommodation, but you should be able to get a nine-month lease, and you should be in fairly well-managed accommodation, that is clean and safe,” says Sirr.

Student vs Residential Construction

There are 4,269 student bed-spaces under construction in 26 different schemes in Dublin at the moment, according to Daniel Moody of Dublin-based Future Analytics Consulting.

As he counts it, approximately 1,360 of those will be ready  for students to move in to for the academic year that starts in September 2017.

For comparison, there are 5,261 housing units under construction in Dublin – 2,429 houses and 2,832 apartments – on 144 sites, according to a spokesperson at the Department of Housing.

(The accuracy of the housing figures that the department uses has been questioned by some experts.)

This isn’t a perfect comparison, because Moody is counting beds, and the department is counting houses and apartments, which usually each have multiple beds.

But it gives you an idea of the scale of student-accommodation construction, compared to other residential construction in the city.

Why Build It?

“Profitability is (…) a key consideration that has driven the student accommodation market,” says Moody, of Future Analytics.

There is also a trend towards the developers retaining ownership and renting the accommodation out themselves, he says.

“Large investment funds, such as those directed by pension and insurance companies, have identified student accommodation as a desirable, long-term invest option given existing and continued future demand,” he says.

Jack Leahy of the Union of Students in Ireland says there is a serious shortage of purpose-built student accommodation in Dublin.

A 2015 report from the Higher Education Authority warned there was a major gap in the supply of student housing nationwide.

And demand is only expected to rise, because the number of students is predicted to increase dramatically over the next seven years, rising from about 160,000 to over 192,000 by 2024.

So Leahy is happy to see more purpose-built student accommodation being built. But he’d rather see educational institutions building it themselves.

“We are keen to see institutions being allowed to borrow to invest in their own accommodation on campus because while it is still quite difficult … it is easier to hold them to account, for the prices they charge, than private developers,” he said.

College grants don’t come close to covering rent these days, he says. As the cost of living has skyrocketed, grants have remained static, says Leahy, which severely disadvantages lower-income students from outside of the main cities.

Moody, of Future Analytics, adds that the government is aiming to attract more international students, and needs purpose-built student accommodation to do so.

Leahy says students arriving from abroad often expect housing, and “They haven’t got the capacity to house them on campus as they expect to be housed,” he says.

So the government aims to encourage the construction of more student beds. Its Rebuilding Ireland strategy commits to “develop a national policy on specific needs and mechanisms for the development of appropriate on campus and off-campus student accommodation”.

Under the strategy, developers of student housing, along with other large project developers, can apply directly to An Bord Pleanála for planning permission, which speeds up the process.

As Leahy of the Union of Students in Ireland sees it, all this will help students directly, but it will also be good for the housing situation in Dublin more broadly.

“It is generally a good thing that there will be more purpose-built student accommodation, it will take pressure off the rental market and … (hopefully) drive rental prices down,” he said

High Prices

Purpose-built student accommodation can be very pricey.

See, for example, Broadstone, where the cheapest option is to share a room with someone else in a flat with six or seven other rooms.

One bed in that room costs €180 per week, so the room attracts €360 per week, and then there are five or six other rooms in the apartment too all attracting the same rent.

In other student accommodation we examined, prices per room ranged between €225 and €260 per week. Rooms are usually en suite, prices include bills, and the kitchen and living room are shared.

GSA and Hines, two of the largest providers of student accommodation in Dublin also didn’t respond to queries about their pricing.

The rents that can be charged are a matter for the Higher Education Authority, and aren’t restrained by the rent cap, says John Whelan, a spokesperson for the Department of Housing.

Parental Choice

In addition to serving international students, the government is keen to encourage the construction of student housing to try and free up space in the over-crowded private rental sector, says Sirr, the housing lecturer.

“There are about 8,000 students in the private-rented sector and they are hoping to transfer them all into student housing,” says Sirr.

But realistically most students won’t live in student accommodation throughout their time in college he says, due to price and the fact that they are living in an institution.

Still, building of student housing is a good thing in terms of the housing crisis  says Sirr.

“Anything that takes people out of the private-rented sector and puts them into purpose-built accommodation, should free up some badly needed private-rented accommodation,” he says.

Laoise Neylon portrait
Laoise Neylon

Laoise Neylon is a freelance journalist. You can reach her at laoiseneylon@gmail.com.

 

Comments

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  2. Matthew
    29 March at 09:32

    That last paragraph is key – I’ve seen a lot of people complaining that student accommodation shouldn’t take priority over regular residential building, but that belies a misunderstanding of how the housing market pressure can come from all directions, and removing a significant amount of students from the market frees up a lot of private space for families and others.

    It’s rather a shame then, that Dublin City Council are actively blocking the progress of two DIT Grangegorman housing projects that would provide space for about 1000 students. DCC (and An Bord Pleanála) have done a lot to contribute to our housing crisis by constantly blocking residential housing projects, or reducing the scale of them for dubious reasons.

  3. Goran
    29 March at 14:17

    If prices are around 200 a week for a bed in a shared room (800 a month for a bed, or 1,600 a month for the room), that’s really not an incentive for students to move into the new built student accommodation if private rental accommodation can give you a private room for about the same amount. There are rooms for 800 a month, and if two share that’s 400 per person, which is significantly cheaper than the student accommodation. And with thousands of properties being held by NAMA off the market, there is no housing crisis, since there is more than enough available houses/apartments, but a highly inefficient property market that caters for the benefit of landlords and vulture funds.

  4. Marianne
    30 March at 09:34

    Matthew: “It’s rather a shame then, that Dublin City Council are actively blocking the progress of two DIT Grangegorman housing projects that would provide space for about 1000 students.”

    Rather, DCC are finally questioning the wisdom of allowing 5000+ total student beds (currently being built or in the planning process) in one sole Dublin residential area, Grangegorman/Stoneybatter, with the prospect of much more if not checked. It’s now claimed that these beds are aimed at foreign students, most of whom won’t even attend DIT (which is still a long long way of being built by the way). Apart from the ‘housing crisis’ there are a lot of factors to be considered when planning sustainable city communities, and building one type of lowest quality accommodation for one transient group is not the answer. Knee jerk solutions such as these have ended in disaster in the past. The real key sentence above, quoting Lorcan Sirr, is “But realistically most students won’t live in student accommodation throughout their time in college he says, due to price and the fact that they are living in an institution.” That’s proven in the UK, for example. So how the current glut of SA will help solve the housing crisis is unclear (and as Goran points out, there are many alternative solutions if the political will was there.) It’s also never mentioned in these reports that SA turns into cheap hostel type beds for tourists during the Summer months. SA is seen as a quick fix by lazy politicians and a cash-cow for developers, plain and simple, who couldn’t give a toss about the housing crisis, local communities, Dublin City, or anything else. But if there’s a belief that SA does in some way contribute positively, at least plan for it accordingly and disperse it evenly around the city in a considered manner. Finally, to say DCC or An Bord P constantly ‘block’ residential projects is ridiculous. As someone who follows planning applications locally they only question something if it’s outrageously egregious or there is massive disquiet amongst local residents, whose observations come very very low down the pecking order when decisions are ultimately made.

  5. Michael
    30 March at 10:05

    It might be worth mentioning also that there are separate development standards for student housing outlined in the Dublin City Development Plan 2016-22. These standards allow for more bedspaces per metre squared than would normally be allowed in residential apartment units.

    There is also the provision for relaxing residential standards for dual-aspect units, which again, makes it possible to accommodate units within a smaller area than would normally be allowed.

    Of significance too is that the provisions of Part V (Social & Affordable Housing) of the Planning Acts do not apply to student accommodation. I’m not sure if this was determined at a local or national level, but it essentially means that developers of student housing neither have to supply a minimum number of units for social housing nor pay the sums required in lieu of this provision.

    Overall then, it is both cheaper to build student housing and possible to extract a higher return on rents due a higher density of units. These factors may also help explain the reason for the current expansion of student housing schemes in Dublin.

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