Dr. Mike Porritt, Vice President, International, Advisory Services at The Scion Group, discusses the impact of the new cap on international students in Canada and how provinces and higher education institutions are responding. He also provides valuable insight into the ways that on-campus housing providers are adapting their housing stock to address housing affordability issues for students.

Mike Porritt started Scion Group’s Advisory office in Canada and has worked with institutions in nine Canadian provinces and Nunavut. He has 15 years of Executive Director or Director level experience in student housing at institutions in the United States and Canada, as well as purpose-built off-campus student housing in Waterloo and London, Ontario. His work includes the development of academic integration programs now in place today within residential programs at McGill University (Quebec), Trent University (Ontario), Winona State University (Minnesota) and Appalachian State University (North Carolina). Combined with his experience in market analysis, planning for new construction and major renovations, he contributes a wealth of knowledge in the Canadian higher education and residential landscape, the US student housing sector, and is expanding Scion’s reach internationally.

GSL News: What has been the immediate impact of the international student cap in Canada?

The biggest change is that instead of protesting about the cap, the sector is now just taking it as a given and focusing on what we do about it. Most people agree that the process and timing could have been better. However, the number of international students has grown so much in the last 10 years that somebody needed to look at the situation. So, the most immediate impact is that we have switched from shock and awe to a more practical focus on what we need to do.

Some of the governments in provinces facing reductions have already made announcements about what providers need to have in place in terms of housing. Canada’s immigration system is federal, and the education system is provincial. So, there is a bit of conflict because the decision to cut study permits was made federally, but the decision on how to allocate the permits within each province must be made provincially. In some cases, the provincial government is a different party than the federal government, and so sometimes they don’t agree. 

GSL News: How are universities and private housing providers adjusting their strategies considering the requirement to guarantee housing for incoming students? 

It’s been interesting because the cap impacts provinces differently. For example, British Columbia (BC) is the second most impacted province, but they’ve already announced how the cap will impact the affected institutions. BC has been working on a student housing programme for over six years and has expanded their campus housing on many campuses. BC has a student housing funding programme as part of its overall housing strategy. BC has been working with the philosophy that the more students are put on campus, the more beds are freed up off campus, not just for students but also for families. The first phase of the funding programme added about 8,000 student beds in BC, and more beds are being constructed or planned. In addition to these beds, the University of British Columbia has added a couple of thousand beds over the last five or six years.  Campuses in British Columbia that still need more beds are hiring people like us to do the marketing demand analysis and develop their housing strategy going forward. They plan to add more beds to several campuses.

The province of Alberta has announced expansions and there are campus plans for growth at the University of Alberta, the University of Calgary, and the higher education system in general.  Alberta has had relatively lower numbers of international students so they can actually increase international numbers and the domestic numbers were already projected to rise. We have been working with several schools in Alberta to start planning more housing.

Quebec faces challenges because the provincial government plans to increase tuition fees for out-of-province domestic and international students at McGill University and Concordia University. As a result, Quebec has faced many protests, and there is a lawsuit between the two universities and the provincial government. We expect that we will be doing some housing planning with them once the lawsuit is settled, because the announcement regarding the proposed increase in tuition fees is negatively impacting enrolment.  The visa cap issue is an issue on top of that one.

Although these are relatively minimal, Nova Scotia and New Brunswick also faced some cuts. Nova Scotia has announced that the universities in Halifax and Sydney need to be able to house at least 15% of their undergraduate population. This is significant because most of the institutions in Halifax and Sydney currently only have the capacity to house around 8%-10%. However, some institutions do not have enough space for on-campus housing because they are too small. I expect we might see some collaborative efforts between institutions and some facilities developed for multiple institutions to share. 

Sydney has had a massive influx of international students, so those campuses will have to look at their enrolments and may choose to reduce in addition to any cuts. Dalhousie is a very large campus, while St. Mary’s has about 7,000-8,000 students. St Mary’s had already planned new buildings, so they will be at 15% when they finish. Dalhousie would need to add capacity. If the smaller schools in town that don’t have the space to build on-campus housing enter into a master lease agreement or partnership with an off-campus provider or with Dalhousie or St. Mary’s, that would likely be acceptable to the province.

Ontario faces around half of the student visa permit cuts for the country. This is because of its size and number of students. It’s not yet clear what the implications are on a campus-by-campus basis unless the campus itself announced it. The Ontario government has so far focused on private institutions. Many of these are those we frequently see referred to as ‘bad actors’ – the type that operated out of strip malls and have been the focus of investigative journalism looking at whether they are anything other than a way to make money from international students. However, some of them are quite legitimate. Around 96% of the cuts in Ontario are focussed on private institutions. Only one university in Ontario has received cuts. That university has one satellite campus with nearly 100% international students. Seven public colleges are also facing cuts. However, the statement by the provincial government only identified one of these. Conestoga College has faced the most growth over the last few years, and so this fall, Conestoga’s entry class will have around 40% fewer international students than it did last year according to the announcement.

Another impact on campus housing is new funding announced by the federal government.  There has been a fund to support housing in general and student housing developers off campus could apply for it.  Now there is a fund coming for on-campus housing support.  I and some other stakeholders have had talks with the CMHC (Canada Mortgage and Housing Corporation), a federal system set up to provide debt for construction and housing.  The CMHC is consulting with various stakeholders on the best way to set up a fund for on-campus housing because there are different variables at play than for off campus.  Campuses that don’t have easy access to low-interest money will be able to tap into the CMHC funds, which should cut costs for students in terms of ultimate rent prices. Hopefully this program is ready to go in the Fall of 2024.

When the Federal Minister announced the student cap, he said there would be two years of cuts. However, it is unclear whether next year’s cuts will be the same as this year’s. We think that the cuts will be considered in terms of campus housing availability and campus partnerships for housing by at least some of the provinces because they have talked about it publicly. In the last year, Conestoga, for example, purchased multiple buildings that, once converted into student housing, will hold about 800 beds, so their cuts may not be as significant as they were this year.

Almost all of the public colleges in Ontario facing cuts this year have been our clients in the last year and a half, putting together housing plans and strategies and updating demand studies because they knew that something was on the horizon. Given that most of them will be able to show housing plans and may have more housing in place than they have now, it will be interesting to see what next year’s cut decisions turn out to be.

Some of the other provinces that aren’t facing cuts are starting to get into student housing more seriously because schools with on-campus housing that has historically not been full or barely full at opening have noticed that the last couple of years, they’ve been at full capacity and sometimes with waiting lists. Some of this has to do with higher numbers of both international and domestic students. From 2025, Canada’s population of 18 to 24-year-olds will start to rise after being static for a long time and is projected to keep rising for over 15 years.  It is rising more in some parts of the country than others. So that’s another issue that needs attention.

GSL News: You’ve mentioned the possibility of master leases and collaboration between providers and private housing operators – how common are these types of partnerships in Canada?

Partnerships are becoming increasingly common. For example, Ontario has the largest number of students by far, so they’re receiving 52% of the cuts. Therefore, there are many discussions around public-private partnerships. We have had some private groups approach us to do market studies of the area to assess potential demand given current enrolment issues. Many private operators and developers would like to work with the campuses. The campuses are not necessarily opposed to working with them; it’s just that most of them have never had this kind of pressure to get housing. The other issue is, how do you house students who can’t afford to live in the housing we have traditionally provided? That’s probably the biggest issue for the private developers in Canada – we need to develop housing at various price points.

GSL News: What can other markets that are facing a reduction in inbound international students due to government policy shifts learn from Canada’s approach?

I think part of what they can learn from how things are going here is an increasing focus on thinking outside the box and reconsidering how we provide housing in general. This means thinking about problems in terms of more than one solution at the same time. This is something that Canadian institutions have done well over the last year and a half because many international students simply can’t afford our current housing stock. 

For example, some universities have been working with companies facilitating connections between students and families or seniors with a spare room in their home. This is not a new concept, but historically, there have been abuses, cultural miscommunications, and misunderstandings in these situations. These companies address some of those issues by preparing something like a dating profile, where the students connect with the seniors and families. They conduct criminal background checks, and they consider shared interests. The companies also facilitate in advance negotiations around things such as helping with chores in exchange for rent reductions and access to kitchens and laundries. This approach eliminates many historical problems, provides extra revenue to homeowners, and allows students to live at a much lower cost. 

There has also been more willingness to experiment with on-campus accommodation in terms of creating higher density/shared bedroom opportunities. It has given the furniture designers, architects and space designers some challenges to say, “Okay, here’s the space we have. We know our students can’t afford this space as it is, so how can we make this into something they can afford and still have some semblance of privacy?” Some campuses have gotten creative, and instead of just putting bunk beds in a room and still having a big desk and big dresser taking up a lot of space, they’ve done bedrooms with murphy beds that become desks or lofted beds with desks and dressers underneath and even hung curtains, similar to those around hospital beds, but nicer, to give students privacy at night and block out light. 

We’re also seeing some changes in design. The University of Waterloo had a building with a six-foot-high pony wall in the middle that separated the beds. They took it out 25 years ago, but in renovating that building, there is a plan to put that wall back in. Ontario Hall, a new Western University building, has half walls separating the beds so students can’t see each other when they go to bed. There’s also an old building at St. Mary’s University where all the double rooms are on the corners and are laid out in an L. Each student’s bed is in one section of the L, so they can’t see each other. Students benefit from being able to split the double room price while still getting a sense of privacy.

Institutions are also getting more creative about how they approach food. Colleges are especially trying to move away from traditional mandatory meal plans because the high costs drive students off campus. Mandatory meal plans are also a primary reason many students leave campus housing after the first year. So now we see colleges moving away from mandatory meal plans and expanding meal plan marketing and advertising to the faculty, staff and non-resident students so they can still increase food revenue but reduce the burden on students in residences. 

GSL News: Do you think the implementation of the student cap will accelerate the move towards building more affordable housing stock and higher-density rooms?

Absolutely. For example, we’ve been working with multiple Colleges to develop housing plans, and they focus on adaptable room spaces because the engagement work with students highlights that students want to share bedrooms at far higher rates than previously. We have seen that cost-of-living pressures mean that students are much more willing to share and there are cultural issues for many international students where sharing rooms is the norm where they have come from. We are working with two campuses with a 30-40% international student population. The international students are mainly from India, yet less than 2% of their Indian students live on campus because they can’t afford it. Instead, Indian students are sacrificing safety to live in more affordable but often overcrowded places off campus. Campuses and private providers won’t get this cohort of students into their buildings until they start doing double occupancy rooms. We know that students are willing to pay a couple of hundred dollars extra if they can get a double occupancy room on campus and get to have the safety and security of living on campus, but if the difference is $600 or $700, they say they can’t afford it. 

GSL News: Are there any lessons that Canada can learn from how this issue has been handled in other markets? 

I think Australia is about six months to a year ahead of us in terms of the adjustments with the permits and what they are doing. There are so many similarities between Canada and Australia. Whether people agree with it or not, the Australian process has been much clearer and upfront. There have been clear statements about the plans so people could adjust. We don’t yet have the same level of clarity.  It is a bad time of year not to have clarity because students are looking at which country to study in, and all they see here is chaos. In Australia, there also appears to be more formalised engagement between the campuses and the off-campus housing providers. I think in Canada, we can learn from that idea of working more consciously together, being willing to learn from each other, and sharing information. 

GSL News: Is there a systemic issue that has made it challenging for providers and private operators to collaborate and engage in more joint planning? 

Some of it is related to issues of trust and competition. Campuses want their beds to be full, so they get nervous when off-campus developers come in. We have had experiences in one city in particular – the city of Waterloo. The city created a zoning opportunity for purpose-built accommodation to serve two big universities and a college – something the city really needed. The problem is that the city allowed it to grow too fast at the beginning. The demand has since caught up to the supply, but there was a period of at least a decade where the campuses really struggled with occupancy because there was so much housing off campus. People just kept building and building fancier buildings – it was the one city where the amenity wars of the US PBSH industry came to Canada for a while.  

Of course, the campuses felt the competition and went from 100% occupancy every year to lower numbers. Other universities saw this and didn’t want that happening in their cities. So, they started putting pressure on the cities to say listen, you either need to learn from what’s going on in that city and not make the same mistakes or just don’t let it happen. Waterloo had some rough patches in the growth period, but somebody had to do it first, and they did about as good a job as you can do. In the end, I’m glad they did it.  The experience made people realise that when they communicate better, they end up with a better result.  Other cities that have purposefully allowed more student housing have learned from those lessons and had fewer issues.

Purpose-built off-campus stock has slowly started coming into other cities, partly due to luck and partly due to planning. However, they have learned some lessons, have not expanded as quickly, and consulted with institutions about what they were doing. The campuses have started to realise that the purpose-built accommodation is going to be built in any case and that it is better to work together.  However, there are some cities that I am worried about because they are going too fast, and they are going to be lucky to be half full of students because they’re building at the luxury end of the market in cities that don’t have many students who can afford luxury market prices. They’ve really got to understand the individual markets because not all of our markets are the same.

GSL News: Are there any further shocks or announcements expected?

I guess the final thing is that we are just waiting to see how many students actually show up this September and again in the January intake. I know Australia and the UK are facing the same thing because there has been so much publicity around visas and everything else. This will be the first full term where we will understand what damage, if any, has been done by all of the publicity around cuts and restrictions. So that is not so much an announcement, as much as this September and January intakes will be the first time we can actually see what happened.

About Scion Advisory

A division of the Scion Group, Scion Advisory Services provides best-in-class, independent campus housing analysis for more than 250 campus markets, empowering our clients to enhance the residential experience for their students.