Southern Institute of Technology has cancelled its proposed $23 million Kelvin Street apartment complex due to the impact of Covid-19.

The apartment block was set to part of Invercargill CBD's $165 million redevelopment.

But SIT board chair Alison Broad says the institute's outlook has significantly changed since the project was approved back in October 2019.

"Education is SIT’s core business, and while provision of student accommodation is a valued part of what we offer, property development is not our core business. 

"At a time like this, even more than ever, we believe it is important to stick to our core business."

Since Covid closed New Zealand's borders, the pipeline of international students wanting to study and live in the region has been disrupted, with no clear end in sight, she says.

SIT's revenue will be significantly impacted over the coming years as a result.

The closure of the Tiwai Point aluminum smelter also looms on the horizon, and SIT is reassessing the demand for vocational education in the region.

Broad said that the board reconsidered the project business case. 

"We concluded that the international student situation and the significant cost of the project placed unnecessary risks on SIT."

The decision has been lambasted by Invercargill's National MP Penny Simmonds, who was chief executive of SIT from 1997 until October last year.

Simmonds says the decision is short-sighted.

"The decision is a perfect example of what happens when a board made up of people predominately from outside the Southland community are appointed to run our well-performing tertiary institution," Simmonds says.

She says while demand from international students is down due to Covid, it will take two years to build the apartments.

"By then it is very likely international students will be back," Simmonds adds.

“But even with the borders closed the current SIT apartments are full this year.

“Not only would the apartments provide much needed housing in Invercargill, they would’ve also provided a construction boost and created jobs for our community."

Simmonds blames the Government's tertiary reforms, saying they have "stripped away" autonomy.

“Rather than undermining the expertise of the regions, we should be building confidence and trust in them to deliver within their communities."

The project is still at an early stage.

SIT has not received title to any of the land required for the project or resource consent enabling work to commence.

Broad says they've offered support to HWCP Management Ltd in finding a new partner for the site.

“Our withdrawal from the project maintains SIT’s strong balance sheet and provides greater security to current and future staff and students," Broad says.

"Funds that were earmarked for the Kelvin Street apartment project will remain available for future use by SIT in our region."

The Kelvin Street project decision does not affect the St John’s project, which will continue as planned.