Surge in demand for student accommodation in Ireland
The increase in demand for purpose-built student accommodation in Ireland has catalysed significant evolution over the past few years. The housing crisis in Ireland means students are often unable to compete with other renters seeking accommodation and, in many situations, they have been shut out of the private rental sector. This has led to increased demand for purpose-built student accommodation, a trend that will continue due to demographic changes and an increase in students in full-time education.
Ireland is now home to 10 universities including the recent addition of 5 technological universities with the merger of former institutes of technology. This, combined with the remaining institutes of technology, private colleges, and further education colleges, gives a broad range of choices for students throughout Ireland. Consequently, there is a desire for many third-level educational institutions to own and operate their own student housing complexes.
In the academic year 2022/2023 there were approximately 200,000 students in full-time education. Notably, this means there has been an increase of 18% in full-time student numbers over the past decade.
The European student accommodation market is more mature than Ireland and whilst once considered a niche investment class, this is no longer the case. There are opportunities for investors and developers to provide quality accommodation in this sector, and to become part of the mainstream commercial property market offering opportunities for private and institutional investors to diversify their portfolios.
In Lisney, we value over 8,500 bed spaces in 23 developments on an annualised basis. From this, we know the sector has remained remarkably resilient as an asset class. International student accommodation brands operating in Ireland include Aparto, Fresh, Mezzino, Host, Nido, and Yugo.
Crow’s Nest – UCC’s new €35m, 255-bed student accommodation hub in Cork city.
Some areas of the country have greater requirements for purpose-built student accommodation than others, with the highest demand being in Dublin. In other parts of the country, including Cork and Galway, the development of apartments for the private rental sector has not been viable. Conversely, the development of purpose-built student accommodation has been viable and in the past 12 months alone, 1,365 student beds have been delivered in Cork across four developments.
In the last decade, approximately €1 billion has been spent on purpose-built student accommodation investments nationwide, including some forward purchases, although there have been limited transactions over the last 18 months, as vendor and purchasers’ expectations continue to realign.
Most recently the European Investment Bank and the Housing Agency agreed to a €435 million student accommodation financing initiative to support the Higher Education Institutes development of affordable student housing, this allows them to access lower interest rates on finance.
240-bed student accommodation in plans at Westside Shopping Centre, Seamus Quirke Road, Co. Galway.
In summary, favourable market fundamentals, including growing demand and higher occupancy rates should ensure investor interest in the purpose-built student accommodation sector remains strong.
Article by Margaret Kelleher, Chairperson and Senior Director at Lisney.