PBSA – THE FACTS & FIGURES

Multinational construction consultancy firm, Linesight, has launched a report on the Purpose-Built Student Accommodation (PBSA) sector in Ireland. The report is an analysis of the supply/demand, pricing, costs and international design trends in the sector and captures feedback from 16 interviewees with the Higher Education Institutions ( HEIs) and the private sector involved in PBSA. Irish Construction Industry Magazine brings you the essential information contained in this lengthy report.

July 2017 saw the announcement of the Irish Government’s National Student Accommodation Strategy , responding to and recognising the need to address the national and international demand for student housing. Demand for Purpose-Built Student Accommodation (PBSA) is forecasted to rise from 57,075 beds in 2017 to 75,640 beds in 2024, making the student accommodation sector highly attractive to the investment, development and education communities alike.

This forecasted increase is not surprising, given that the 15-24 year old population is set to increase at a faster rate than the general population between 2016 and 2026. Furthermore, the level of third-level enrolments shows an upward trend since 2016, and the demand for student accommodation stands at 31.5% of the full-time student population.

Looking at the supply side, the national strategy estimates that the current stock of PBSA stands at 33,441, which leaves a significant shortfall of 23,634. By 2024, this shortfall is expected to reach 26,543, or 19,368 when projects in pre-planning phase are accounted for, which is 18% of current levels. The impact that this is having on the already-pressurised private rental sector in Ireland is considerable. Estimates put the proportion of third-level students in Dublin with access to PBSA at a mere 13.2%, which is significantly less than the 30% estimated for London. Rents are exceeding previously recorded levels and demand is far outweighing supply in the wider residential market. This underlines the need to provide dedicated, affordable student accommodation options, which in turn will release residential rental stock back to the private sector.
In addition to this domestic demand, international students still have an insatiable appetite to travel and study abroad. As the closest English-speaking country to the UK with a suitably located and serviced market in Europe, Ireland is well positioned to reap the benefits from increased interest in studying in Europe. Every Higher Education Institute (HEI) interviewed as part of this research exercise has a mandate to increase their international student cohort. Housing international students, as well as our own growing Irish student population, means an increased requirement for PBSA.

The Higher Education Authority (HEA) reports that HEIs and private developers are estimated to make a total gross investment of approximately €1 billion over the period from 2017-2024 in PBSA. While cost has been identified as one of the biggest challenges in the delivery of PBSA, quality can still be achieved within the constraints of a tight budget. By simplifying PBSA schemes with repetition of construction, relatively simple building services and focusing on a small number of key considerations, a student accommodation development can achieve optimum design within an appropriate budget. With regards to inflation, tender prices have increased at a faster pace of 7.5% on average to a level comparable to mid-2004, and the gap between these and the input costs of labour and materials continues to close. This emphasises the importance of providing for future construction inflation in feasibility studies and cost plans.

Other related challenges such as finance, pricing issues, suitable land availability and costs, and access to funding are present, but the baseline macroeconomic metrics stack up for all stakeholders, and the more PBSA that is built in Ireland, the more competitive the sector will be. Amongst the many planning issues that emerged from the research conducted for this report is the need for clarity around planning requirements relating to the concentration of student accommodation. Dublin, for example, has 76,000 full-time students, and so the perceived restriction on PBSA units within a 1km radius in the city is deemed to be unreasonable amongst those interviewed. This also places further pressure on the private residential rental sector during what is recognised as a housing crisis in Dublin and elsewhere.

Up-to-date analysis on the supply pipeline of student accommodation as of November 2017 saw Linesight commission EY-DKM Economic Advisory to review the available data on trends and projections for the national student population over the next decade.