Could a 10sqm room be the answer to affordable housing for students? SAMANTHA JONSCHER and ANDREW BARCLAY investigate.
University of Sydney (USyd) argues an ambitious $80 million residential development will deliver affordable accommodation for students.
But an investigation by Central News can reveal widespread concern from students, council and neighbours about the size and scale of the development and its contribution to the university's bulging coffers.
USyd wants planning laws changed to allow it to reduce the minimum size of rooms in the new building to 10 sqm. It will charge students $300 a week to rent these ultra-compact units.
Current regulations stipulate the minimum size for single rooms is 12sqm.
Yet in 2016, the university’s property holdings doubled in worth over a twelve month period owing, largely, to two other student housing facilities opened during that time.
Income from student accommodation has risen sharply and, in 2016, USyd earned an operating surplus of $140 million.
Critics claim this is further proof of Australian universities shift from education providers to property developers.
The Regiment Mixed-Use Redevelopment Project is part of the $2.5 billion Campus Improvement Program at USyd. It is slated to be built on the corner of City and Darlington Roads in place of the existing Regiment building.
Designed to transform its campus, the plan calls for a 68 per cent increase to the size of the Camperdown-Darlington Campus floor space by the end of 2020.
This includes a 21 per cent increase in student numbers on the campus as well as 4,000 units of “affordable” student accommodation.
USyd isn’t alone. Figures show more than $2.5 billion of construction is underway across Sydney’s universities. One such development is Building 2 at University of Technology Sydney (UTS) which will include “a 16-level building with a distinctive twist and a tri-level, glass-fronted scholarly reading room".
It follows the development of world-renowned architect Frank Gehry's first Australian building – also at UTS – the $180 million paper bag building.
For neighbours of the university, the campus expansion is alarming. Their concerns include the height of the buildings and likely associated congestion with an increased population.
Formal submissions opposing the development application voice concerns about parking, the removal of trees, and the need for additional amenities and public transport to service the area.
I can’t help but feel this is just a revenue thing
Longtime resident Tess Anderson lives just 200 meters from the proposed development site on Queen Street. She only became aware of the towering development through coverage in the media.
In the 22 years that Anderson has lived at her address, she claims she has watched her community fragment and gradually be absorbed by the university.
“That’s 800 people who will be suddenly living across the road, and there was no consultation about that,” Ms Anderson said.
“I can’t help but feel this is just a revenue thing. It’s not in the best interests of our community, it will add to congestion and do nothing for housing affordability.”
In response to the development application, submissions raise concern about the university’s lack of consultation with the community.
President of the University of Sydney Student Representative Council (SRC) Isabella Brook said any kind of development, regardless of its purpose, needed to be sympathetic to the community and follow proper process to allow members of the community to voice their concerns.
“Whilst the need for student housing is imperative, it is not worth steamrolling the wider Sydney community of which the university plays such an important role.”
A key theme stressed in planning submissions for the mixed-use project at the City Road entrance to the university’s Camperdown Campus is that it will help ease the city’s housing affordability crisis.
Sydney is the 10th most expensive city in the world to rent. And over the past year, median advertised weekly rents have increased by 10 per cent in the inner city – putting the Sydney’s median rent now at $540 for an apartment.
A report commissioned by the university from Cred Consulting claims a key benefit of the development will be an “increased supply of quality affordable student accommodation and reduced competition for affordable rental housing for the broader community.”
That same reports also controversially calls for a reduction in the minimum size of the building’s rooms.
The report, submitted to the Department of Planning, seeks approval to reduce the minimum from 12sqm to just 10sqm on the basis of “increased education spaces and communal amenity.”
The report states: “Students prefer to study outside of their room when facilities are available to improve their education experience through social interaction and discussion.”
This affordable accommodation is not indexed against incomes, but the rental market itself.
The $300 a week figure the university plans to offer its residents is deemed affordable because it is 75% of the market rate.
Affordable housing is defined by the City of Sydney as absorbing less than 30% of an individual’s income. A student working 20 hours a week on minimum wage earns $354. Even if this is supplemented by the maximum amount of Youth Allowance by Centrelink, the average student’s weekly earnings is capped at $570 per week. On this income, the university’s proposed $300 a week rent absorbs 60% of that individual’s income.
The model... allows the university to raise rent prices without seeming to purposely neglect lower income students
Ms Brook from the SRC does not think the university is doing enough to ensure that accommodation is affordable.
“The university and our governments could be doing so much more to support students whilst they are studying and ensure quality and affordable housing,” she said.
“There also seems to be little consideration for international students, who have to pay up front uni fees and have restrictions placed on how many hours they can work.”
USyd is attempting to bypass the traditional development application process by applying for the Regiment development to be considered a State Significant Development (SSD) on the grounds that it will be “Educational Establishment’.
This moves allows the State Government to approve or deny the development application without approval from councils.
‘Educational Establishments’ are defined in the SEPP (State and Regional Development) 2011 as "development for the purpose of educational establishments (including associated research facilities) that has a capital investment value of more than $30 million".
The university argues that the development will “enrich the experience of university life for all students... integrating within educational establishments, new and affordable student-accommodation facilities.”
The 19,500 sqm development is slated to include only 1700 sqm of “educational meeting/teaching/e-Learning/study areas". This is principally made up of three music rooms, four teaching rooms, two learning hubs and a technology hub. This constitutes just nine per cent of the development’s total area.
The university also argues the development should not be classified as private because its facilities, infrastructure and open space are “ integral to the university’s broader educational and research functions which are inherently public in nature ”.
This has attracted the ire of the City of Sydney Council.
Council lodged an official objection to the development, arguing “a proper consideration of the proposal reveals that it is not for the purposes of an educational establishment and should not be considered as an SSD application".
Further, key to the university’s arguments in favour of reducing the minimum size of the building’s rooms is the claim that the property will enrich the entire student body through its not-for-profit status.
The development application reads: The university‘s accommodation portfolio is run on a ‘not for profit’ basis with any net income subsequently directed towards accommodation scholarships.
The University of Sydney’s SRC student accommodation officer Jenna Schroder said the university isn’t being honest.
“The university’s model of accommodation management allows the university to raise rent prices without seeming to purposely neglect lower income students who cannot move out in such a competitive housing market,” she said.
Analysis from Central News revealed the university’s property holdings doubled in worth over a twelve month period owing, largely, to two other student housing facilities opened during that time.
The 2015-2016 annual report states: “The student housing halls of residence were valued on a fair value basis as defined in the accounting standards at $184.5 million as at December 31, 2015 (2014: $91.7 million).”
Opened in 2015, the university’s other major accommodation development is comparable in size and proposed rent to the proposed Regiment building development. A GIPA request lodged by Central News reveals the Queen Mary Building boasts an annual revenue of nearly 12.7 million dollars.
According to the 2015-2016 annual report, the Queen Mary Building also added 18 million dollars to the university’s property portfolio. The university's student accommodation portfolio now accounts for 23.5 per cent of the university’s total property values.
This follows “solid” growth in student accommodation as a form of investment for property developers across Australia and beyond amid continued growth of the sector – now worth a reported $19.6 billion worldwide.
Research from property consultancy Knight Frank points to student accommodation as an attractive and “maturing investment class.”
“The changing fortunes of Australia's diverse economy is beginning to provide an opportunity to investors and developers of student accommodation,” the report notes.
USyd's own income from rental fees has also sharply increased over this period – pointing to the university's growing reliance on this as a form of revenue.
“Other fees and charges increased by $11.8 million as a result of the development of university-operated student accommodation,” notes the most recent annual report.
All of this is happening against a background of increased profitability for universities and higher fees for students.
The University of Sydney did not reply to repeated requests for comment.