Third-level colleges have emptied for the summer but their managements are already grappling with how they will conduct a new academic year in the shadow of Covid-19. Many are considering holding lectures partly or fully online, with limited face-to-face contact for tutorials, practicals and laboratory work.
They also face the potential loss of international students, worth about €380 million a year to the Republic's colleges and universities. About 17,000, almost equal to the entire student body of Trinity College Dublin, attended third level here during the academic year just ended.
Some predict that this could fall by as much as 80 per cent in the autumn, but the final figure depends so many variables that it remains hard to predict. "We're really peering into the unknown here," concedes Jim Miley, director general of the Irish Universities Association (IUA).
He notes that one influence will be travel restrictions imposed by the countries from which most students arrive, that is the rest of the European Union, the United States, India and China. Even if they do come, Government social distancing rules, now set at two metres, will determine how many people can actually attend classes at one time.
The loss of foreign students, and Irish people who decide to attend college via their laptops, would be felt most keenly by organisations that provide them with accommodation, which includes third-level institutions themselves. Accounts for the seven universities represented by the IUA show they earn about €70 million a year renting out rooms to students.
According to figures for the 12 months ended September 2019, University College Dublin's (UCD) rental income from residencies on campus was €28.6 million. The number for Trinity, which has rooms on its city-centre campus and in Dartry on the capital's southside, was €12.9 million.
Miley confirms that this is not commercial income, but explains that colleges need the cash to pay for the accommodation in the first place. “Any surplus generated is reinvested for refurbishment and replacement,” he says. “For instance, UCD is in the process of refurbishing blocks that would have been built 25 to 30 years ago.”
Similarly, if student accommodation blocks remain totally or partly empty for the next academic year or two, universities will still have to foot the bill for their upkeep, maintenance and security. “It still costs the same amount to run the building,” says Miley.
The question then is whether or not those buildings will house students from the autumn. Michael O'Flynn, chairman and chief executive of construction business the O'Flynn Group, which manages 11,000 student beds in the Republic, the UK and Germany, says there are grounds for some optimism.
O'Flynn Group owns 450 student apartments across two blocks in Cork. It manages more than 900 in the Point Campus complex it built in Dublin's East Point with the backing of private-equity firm BlackRock, but sold to German investor DWS Group in February for a reported €172 million. Inquiries from Irish and international students are reasonably strong, O'Flynn notes, although he agrees that it will take two or three months for a really clear picture to emerge.
He speculates that, if quarantine rules apply, overseas students could arrive at different times. Beyond that, student accommodation generally consists of groups of en-suite bedrooms with common areas, including shared kitchens. This raises the inevitable question of managing social distancing within those buildings, or the Government changing the rules before the next academic year rolls around. “It may well do in the next two months or three months,” O’Flynn observes.
The IUA wants the Government to clarify this. According to Miley, one issue it has raised is, if wearing masks becomes the practice on campus, can social distancing then be cut to 1.5m or even a metre. “The answer to that will have a profound effect on all of this,” he says.
Universities are not the only ones likely to suffer. In fact, private investors have more to lose. Student blocks have mushroomed in the Republic's cities, particularly Dublin, in recent years. Investors are drawn by the 80,000 people who go to the capital's colleges and the fact that these buildings benefit from fast-track planning rules for housing, which allow developers bypass councils and go straight to An Bord Pleanála for permission for their schemes.
US group Hines is spending more than €140 million in Dublin through its Aparto business. It will shortly add a building on Cork Street to existing complexes on Dorset and Thomas streets, Summerhill and UCD. The five structures will hold almost 1,800 beds.
In February, multinational Global Student Accommodation bought five blocks in Dublin from its partner, Harrison Street, in a deal said to be worth €400 million. The 1,900 or so rooms it acquired were rented mainly by students going to Trinity, the Royal College of Surgeons, UCD and the new technology university in Grangegorman on the capital's northside.
Current applications to An Bord Pleanála show developers seeking permission to build more than 1,100 student apartments across Cork, Dublin and Galway. Two years ago, real-estate specialists Cushman & Wakefield calculated that investors were planning to build more than 6,000 bedrooms in the capital alone.
So has Covid-19 pulled the rug out from under this money? O’Flynn argues that student accommodation will remain a solid asset, but agrees current conditions will cool the market. Growth in rents, which are nudging €1,000 a calendar month or more, well over €200 a week, could halt, he predicts. “I don’t think that is going to continue, I think the whole rental situation is going to get a reality check.”
Investors could stall, or even cancel, new developments as a result, as increasing rents helped lure them to the business in the first place. But those that have already committed will have to cope with the post-Covid environment. O’Flynn is not sure that this will be a whole lot different from what went before the pandemic.
He says many British universities, including prestigious colleges in the likes of Oxford and Cambridge, have increasingly adopted online lectures, but still require students to come in for tutorials and practicals, where they work with teachers in smaller groups.
All the rooms in modern Irish student blocks have high-speed internet connections, so their occupants will be able to stream lectures if necessary. However, O’Flynn maintains that they will still want that experience of “going to college”.
Miley agrees that actually going to college would be better for students than simply getting their third-level education at home. Relying only on lectures may work in some subjects, but many disciplines, particularly in science and engineering, require supervised practical work, which means students have no choice but to be there.
However, the Government’s wholesale closure of pubs and restaurants in its efforts to contain the pandemic has cut off a traditional source of part-time work for students. Living away from home and paying expensive rent is a lot harder without the cash earned from this. Many are probably getting the €350 per week Covid-19 payment, but Miley predicts that this will run out.
“That is an issue for the Government to address,” he says. “If students drop out of college, what are they going to do? It’s better to get them through it and then they are in a much better position to contribute to the economy as properly qualified graduates. They may need support to continue their education.”
University revenue from student rents
University College Cork: €7.8 million (12 months to September 30th, 2018)
University College Dublin: €28.6 million (12 months to September 30th, 2019)
Trinity College Dublin: €12.9 million (12 months to September 30th, 2019)
Dublin City University: €11.8 million (12 months to September 30th, 2018)
University College Galway: €5.2 million (12 months to September 30th, 2018)
University of Limerick: €15.6 million (12 months to September 30th, 2018)
National University of Ireland Maynooth: €5.5 million (12 months to September 30th, 2019)
Some key players
O’Flynn Group
Cork-based construction business, O’Flynn Group, led by chairman and chief executive Michael O’Flynn has a specialist student accommodation arm that manages more than 11,000 purpose-built apartments in the Republic, UK and Germany. The company owns two blocks in Cork, where it first went into student accommodation, with a total of 450 beds.
It manages more than 900 beds in the Point Campus complex it built in Dublin’s East Point with the backing of private-equity firm BlackRock, but sold to German investor DWS Group in February for a reported €172 million. The company designs, plans and builds student accommodation before often selling it to investors but continuing to manage it on the new owners’ behalf.
Hines
US property giant Hines is one of the most active players in the Republic's overall real-estate and construction markets. Three years ago it announced plans to develop student residences in the Republic and UK. Through its Aparto business it now operates four blocks in Dublin, the Binary Hub on Thomas Street, Dorset Point on Dorset Street, Beckett House in Summerhill and Montrose at UCD. It will open an fifth, the Loom, on Cork Street towards the end of the year. The five buildings will hold almost 1,800 bedrooms. Hines's outlay is said to be more than €140 million.
Round Hill Capital
Multinational Round Hill Capital and its partner NBK Capital Funds recently paid €85 million for a development in Dublin’s Liberties. Construction was due to begin next month on the former Brewery Block site close to Newmarket Square on the complex, which will contain almost 370 student bedrooms when it is finished.
Round Hill invests in residential and commercial property through 14 offices around the world and has a long-established student accommodation arm. Specialist UK firm Nido Student will manage Round Hill's complex in Dublin.
Global Student Accommodation
Dubai-based Global Student Accommodation (GSA) rents purpose-built apartments to students in 33 cities across eight countries around the world. In February, it bought four blocks in Dublin, Ardcairn House, Kavanagh Court New Mill, the Tannery and Broadstone Hall from its partner real-estate firm Harrison Street, which continues to manage the properties, in a deal said to be worth €400 million.
The 1,900 bedrooms were let mainly to students attending Trinity, the Royal College of Surgeons, UCD and the new technology university in Grangegorman on the capital’s northside.
GSA bought a 500-bed complex on Gardiner Street several years ago from Carrowmore, run by developer Pat Cox. Mr Cox previously worked for O'Flynn Group's UK business, but is now involved in a High Court dispute with several of that group's companies.
