Key Takeways
Growing demand versus static supply
Full time student numbers have grown consistently in the past five years and we are projecting that student numbers are likely to rise by over 30,000 nationally over the next decade.
This growth alone will translate into an increase in student demand of almost 17,000 beds over the next decade. However, in reality significantly higher bed numbers than this will be required over this time horizon in order to also alleviate existing supply/demand imbalances which have spilled over into the private rented sector.
To quantify this supply/demand imbalance, by 2034/35 we estimate that total national demand pool for student accommodation could reach over 115,000 beds compared to current supply of only approximately 47,000.
Improving investment backdrop
Thankfully the investment backdrop for student accommodation improved last year with ECB interest rate reductions helping drive a recovery in transactions within the PBSA segment. Investor interest in the student accommodation segment remains strong which augurs well for further improvement in PBSA investment.
Further investment and bed supply badly needed
It is critical that Ireland capitalises on strong investor sentiment towards the student accommodation segment. On the financing side of things, gradually lower interest rates should help scheme viability but unfortunately construction costs remain elevated compared to pre-2021 levels so supports in the form of subsidies and/or VAT reductions should be considered to spark development in the segment. Ireland’s approach to rent caps (which also applies to the student accommodation segment) also warrants a rethink if we are to harvest the investment needed to reduce the growing supply/demand imbalance in the market.
