2018 Market Review - Purpose Built Student Accommodation

 

   

As the third most popular global destination for international students studying abroad, Australia is well positioned to leverage the influx of global investment that has seen Student Accommodation grow from a niche investment to a global asset class. In 2017, Australia was home to 624,001 international students studying on  student visas across the country. International student enrolment in higher education courses has grown by approx 13% from 2016 to 2017. Brisbane’s local council infrastructure charges reductions were implemented in 2015 in an effort to address increasingly overcrowded suburban rental properties and Brisbane’s Purpose-Built Student Accommodation (PBSA) development has boomed in the past two years as a result.

 

This institutionalisation of student accommodation as a viable asset class has occurred across Australia, encouraging international pension funds and ASX-listed companies to enter the market. According to Savills Australian Student Accommodation Market (ASAM) Report, there are currently 76,201 beds of PBSA across the eight capital cities. Of these 47,534 student beds are owned or managed by commercial providers.

 

Savills ASAM Report shows the pipeline of PBSA in Brisbane has reduced, with the total pipeline of student rooms developed decreasing from 10,682 rooms reported in 2017 to 6,685 in 2018. There appears to be a market shift towards self-contained accommodation with more than 30% of Brisbane PBSA pipeline comprising of studios & less than 12% of traditional dormitory style accommodation. The balance of the pipeline is primarily made up four, five & six bedroom shared apartments.

 

Despite some concerns over the uptake of the current & expected pipeline of PBSA in Brisbane in the short term, there is considerable potential for further growth & development in this space. Savills report the existing supply of purpose built student accommodation in each capital city is currently less than 12% of the full-time student population with the exception of Canberra which sits at approx 28%. Considering all capital cities apart from Canberra are currently providing approximately one PBSA room for every 10 full time students, there is still considerable room for growth to be had in this sector.

 

Student accommodation attracts a broad range of investors due to the strong fundamentals of the asset class and this is expected to continue as Australia’s international student population continues to grow year on year. While Brisbane’s student accommodation market will likely go through a stabilisation period as a result of this rapid growth, oversupply of PBSA product is unlikely with Australia’s ranking as the third most popular global destination for international students and double-digit growth in student visa numbers safeguarding investors returns in the long term.

 

Hive is experienced in the consultation, design & delivery of purpose built student accommodation. We understand the specific drivers of this rental market and are dedicated to leveraging this knowledge to maximise the investment returns for our clients. For more information about the services offered by Hive please contact us at today on 1300 882 326.

 

 

 

 

 

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