Doctor of Student Housing: In Canada, the UK, and Australia, watch the actual international numbers this fall

What was unique about student accommodation industry performance and activity in Q1 of 2024? In the student accommodation arena, there continues to be a focus on the impact of international students and the financial viability of secondary/regional institutions.

Mike Porritt, Vice President - International, Scion Advisory Services is The Doctor of Student Housing.

To that end, The SHURE Initiative checked in with Dr. Mike Porritt of The Scion Group Advisory Services. Dr. Porritt, a sought-after industry expert, is a veteran of the university and student accommodation arenas, having worked on both sides of the game (for university and private developers).

Dr. Porritt offered his analysis in this SHURE Initiative interview.

SHURE: What have you observed in the first quarter of 2024 relative to leasing velocity in the student accommodation arena in G7 countries and the Eurozone?

DR. OF STUDENT HOUSING: In the UK, Australia, and Canada, the most significant question mark is on the impact of all the publicity around study visa cuts and the cuts and spousal visa changes that did eventually happen.  There is a degree of nervousness about no-shows that is likely higher than other years for this Fall.  Things for domestic students are generally the same, and the US lease-up seems on track - especially in the major institution markets.  In the US, for international students, the numbers have been promising and rising since the end of the pandemic and under the new administration.  Again, There is nervousness in the system with the current campaign and the possibility of reversion to the previous administration, which saw a dramatic decrease in international students though that group does not make up as much of the market in the US.

SHURE: We hear that capital markets may have 'thawed' in the first quarter. Do you agree or disagree with this statement?

DR. OF STUDENT HOUSING: A lot of money is waiting to be spent and for interest rates to start falling. Big banks in Canada and the US anticipate rates lowering but slowly. This is a large reason why the Canadian government is making so many incentives related to housing starts, many of which can apply to student housing—including a program under development for on-campus housing.

SHURE: The Canadian population has been surging at record levels in recent years, including rising international student populations. However, the federal government student visa cap will impact enrollments nationally for a two-year term, with the first impact in Fall 2024. What is the general tone you have heard from university/college executives in recent weeks about the student visa cap?

DR. OF STUDENT HOUSING: This could be a long answer, but I'll keep it brief.  The federal government set the caps on visas to be implemented by the provinces in a ratio relative to their current number of student visas.  This means that Ontario and BC received the most cuts to be managed.  Nova Scotia came next.  Many provinces did not face direct issues with reductions as much as issues with changes to which academic programs no longer counted towards Post-Graduate Work Permit status for international students, and this impacted several public Colleges that had private curriculum delivery arrangements with private colleges.

The provinces have now indicated how the cuts will be managed across the institutions.  Ontario applied them mainly to private colleges and some public colleges, which have experienced disproportionate international student growth in the last few years.  Only one campus of one university was directly impacted.  In BC, the load was spread out more between private and public.  Keep in mind that colleges and universities do not have the same system in Canada, and generally, colleges have higher proportions of international students.

 The other issue is how all of this publicity will impact the incoming class size of international students.  We won't know that until the Fall.  There is no guarantee that the cuts will be managed the same way in the second year.  Some institutions have already taken steps to grow their housing stock, and perhaps they will get credit for that come the following year.

SHURE: We continue to hear operations costs cutting profit margins due to inflationary and supply chain issues. Have you seen any easing of operational expenses in 2024, or has this situation become more challenging?

DR. OF STUDENT HOUSING: Follow the interest rates and inflation rates. If they start to ease, the costs will begin to ease. Labour supply is another issue.

SHURE: Do you believe a theme or trendline is emerging in 2024?

DR. OF STUDENT HOUSING: In Canada, the UK, and Australia, watch the actual international numbers this Fall. What will be the impact of all of the discussions around policy and number changes, as well as the actual changes?  In the US, watch the election—after the 2016 election, incoming international students dropped significantly.

SHURE: Any other thoughts/observations?

DR. OF STUDENT HOUSING: Affordability and having buildings with multiple price points and options remain key ingredients to success.  The government and some provinces are incentivizing more campus housing in Canada, whether by the campus or through partnerships. This may lead to a well-needed growth in campus housing.