Belfast facing glut of student rooms
Much has been said on the subject of the new crop of purpose-built student accommodation springing up in Belfast.
The enthusiasm of large institutional investors for these schemes can be seen in most university cities in the UK and the perceived undersupply in Belfast is viewed as offering attractive opportunities.
Student blocks are regarded by planners as a chance to repopulate the city centre, with the quarter one RICS Commercial Market Survey again having shown an uncertain retail landscape.
They are also seen, in the case of the new Queen's University Halls, as a way of satisfying demand from first year students for this type of accommodation.
These aspirations have merit but it now appears that oversupply will almost certainly result.
The percentage of students in Northern Ireland wishing to stay in purpose built blocks is unlikely to reach the equivalent figure achieved in the rest of the UK, as our student letting market has some important differences.
The majority of students at our universities are local and already have two accommodation choices - to stay at home and commute or access the existing student housing stock.
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It appears that in other parts of the UK it is not as commonplace to study at your local university and commuting from home is therefore not usually a feasible option.
Here, financial, social and other considerations can make this choice more appealing.
Many private landlords will confirm that our students are price sensitive and the considerably more expensive purpose built accommodation will not be perceived as good value.
The suggested shorter 44-week leases are also not as favourable as in other UK cities, with many students happy to retain the property over the summer months whilst working and socialising.
One of the attractions of purpose-built blocks is the uniformity of standard, which is convenient to overseas students who can confidently book online. This is, again, not as important for local students who find it relatively easy to attend viewings, while market forces and HMO regulation ensure that currently available private rental accommodation is of a reasonably high standard.
Much of this has already been well aired but the long term economic effect of these blocks does not seem to have been fully debated.
The original building project creates employment but the long term effect is likely to be negative for the local economy.
Currently most student rent is paid to small and medium sized local landlords and, after loan repayments, a significant percentage is circulated in our economy. If all of the proposed blocks are built (perhaps 7,000 bed spaces), the net outflow could be in the order of £30m-£40m per annum.
This would have circulated in the local economy, with the negative effect being a multiple of this figure.
In my view, it would be unfortunate if large institutional investors are further encouraged to invest in this particular type of property in Northern Ireland.
Even if initial ownership is local, properties of this type are often traded.
Politicians, planners, government departments and our local institutions need to constantly be aware of the need to create a sustainable local economy, looking to the longer term and resisting the pressures to work in isolation.
- Richard Smyth is a fellow of the Royal Institution of Chartered Surveyors (RICS) and a partner at MacFarlane and Smyth Estate Agents