Future uses for student accommodation

Future uses for student accommodation

Kieran McConnell 24 Jun, 2020

Since the late 1990s, Purpose-Built Student Accommodation (PBSA) has been a feature of development in and around the centres of education in our cities, housing the burgeoning student population that has significantly contributed to Australia’s population growth in recent years.

Now, as overseas migration, including most international students, has slowed to a trickle, how will we use these towers of one-bedroom units? Kieran McConnell shares some insights from his capstone research project into PBSAs – future ghost towers, or ghettos in the sky?

High levels of vacancy resulting from depopulation or a change in economic conditions can have long-lasting ramifications for the urban environment in which vacant buildings and houses are located.

Cities have always experienced varying levels of occupancy due to the ebbs and flows of the economy and changes in living preferences. Normally, this is a gradual phenomenon, that allows for organic regeneration and growth (creative destruction).

However, when areas contain a heavy concentration of a specific demographic and/or an industry, rapid change, either deliberate or via external shocks leaves them overexposed to a rapid loss of said people and industries, and because policymakers can be blinded by the good times, there is generally little in the way of ready to go interventions to stem the tide.

COVID-19 – a challenge for ‘student cities’

Australian cities where international students account for a large share of residents are scrambling to find solutions to the possibility of empty high rises and streets due to the COVID-19 pandemic.

Restrictions put in place to contain the virus have, in part, resulted in the first decline in student visa arrivals since March 2013. Adding, to the reduction in demand, capital cities are experiencing a boom in purpose-built student accommodation developments.

The City of Melbourne alone has over 10,000 accommodation units currently under construction or with planning approval. As a result, demand for student accommodation – once thought of as a given and projected to grow for the foreseeable future – is now staring down a double barrel of low demand and substantial oversupply.

These are the key elements for long term vacancy and has been historically correlated with social problems for cities including vandalism, abandonment of buildings and ultimately a cascading deterioration of whole areas.

Are there alternative uses for PBSAs?

To avert the negative consequence of population loss, other suitable uses for PBSA facilities need to be found.

However, questions have been raised over the ability for PSBA units to be retrofitted. And with an impending economic downturn (our recently-updated national forecasts are showing Australia’s national growth rate at 0.7% in 2020/21, down from 1.2% in 2019/20), some previous viable options such as general residential, hospitality and commercial use, may now be untenable.

For operators of PBSA facilities, they would prefer to fill the empty beds with students once again, and so too would city planners (this is reflected in the restrictive section 173 agreements that stipulate PBSA facilities can only accommodate students).

Getting students back to Australia

Lobbying by universities for the federal government to introduce policy that allows students back next year through ‘special travel bubbles’ and quarantine measures will in some way help avert a situation of ‘destudentifaction’ (out-migration of students). However, with Universities such a Melbourne Uni forecasting $1 Billion lost in revenue for the next three years, the status quo returning is looking highly unlikely.

As a consequence, operators of PBSA facilities in Australia have approached and been contracted by state and local governments to utilise extra capacity for social housing. Scape, Australia’s largest provider of PSBA has offered excess capacity to the Victorian State government for quarantine purposes and in Queensland, the state government is utilising a Scape PSBA facility in inner Brisbane to accommodate 300 homeless persons for the duration of the pandemic.

Being cautious about short term thinking

Little or no planning controls or policy exists for such a situation and worryingly, this change in use is being considered and implemented in extreme circumstances.

Yes, it will quickly increase the number of beds and satisfy immediate requirements, but will the converted units and their location meet the needs of its future residents, most likely our most vulnerable citizens?

Are PBSA facilities suitable for social housing?

This situation has led me to investigate whether social housing is an appropriate alternative use for PBSA facilities. My research focused on the spatial and building characteristics of PBSA facilities constructed post-2002 in the City of Melbourne to determine a level of transformation suitability.

The analysis generated a score based upon a like-for-like swap (structural changes not considered). It demonstrated that most PBSA facilities had a medium-to-high level of appropriateness. Generally, facilities have a high number of services present within walking distance. And despite the relatively small size of the standard PBSA units (Type 1 – PBSA design guidelines), facilities have potential to satisfy a combination of community housing guidelines, Better Apartment Design Standards and current supportive housing recommendations, due the provision of communal areas.

Furthermore, in addition to satisfying these characteristics, the majority of PBSA facilities are made up of studio or one-bedroom units. This configuration according to Victorian Auditor General report into the state’s public housing system is what it desperately needs and is failing to address (there is an overall lack of one-bedroom stock across the state but there are also serious spatial mismatches – in particular, a lack of appropriate housing stock in growth areas).

A win-win-win

For State governments like Victoria, this change in use could quickly and effectively increase the quality and number of units available for social housing.

For the PBSA operators, it could help plug the huge revenue hole that the reduction in the number of international students coming to Australia has caused, and will continue to cause.

And for affected local governments, it may avert depopulation and its negative economic and demographic effects.

Learn more about this work

Kieran McConnell is a forecaster with our local government forecasting team, and has prepared this piece as a summary of his capstone research project. For a more detailed analysis of opportunities related to Purpose Built Student Accommodation in your area, or to read the full study, contact our forecasting team here.

Tags: Housing
Kieran McConnell

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