Student housing not meeting supply in Sydney

The high quality of Australia’s universities is a major drawcard for international students, but accommodation availability is just not keeping up with supply in Sydney.

In the latest rankings, Sydney University sits on The Times Higher Education top 100, giving the long established international rivals a run for their money. It came in ranked at 61st in the world. The University of NSW joins Sydney among the universities in another ranking, the QS top 100. 

Australia's international student population continues to grow at a double digit rate, recent research from the estate agency, Savills International.

The OECD noted this reflects an international trend of student mobility when they reported more than four million international students were enrolled in tertiary education outside of their country of origin in 2013, an increase of 50 percent from 2005 levels.

Australia hosted the third largest number of international students at 6.2 percent in 2013, behind the US and UK at 19.4 percent and 10.3 percent respectively.

Sydney's standing contributes to robust demand for international student accommodation. 

New South Wales, then Victoria and Queensland have the greatest number of enrolments. 

NSW has around 327,000 domestic higher education students with another 93,000 international students.

The top nationalities, China, India, Vietnam, Republic of Korea and Malaysia. 

Chinese students provided over 27 percent of the total number of international students in Australia in 2015. 

Australia ranked as the third most popular destination for Chinese students (12.1 percent) after the US (33 percent) and Japan (12.3 percent). Australia was also third most popular for students from India after the US (48.2 percent) and UK (11.5 percent).

This has made property investors, institutional and private, move beyond the traditional property markets into student accommodation where the fundamentals are strong.

Some five percent of students are in university accommodation, five percent are in commercial accommodation with 90 percent renting privately or living at home.

At the moment there is a "critical undersupply" of appropriate Purpose Built Student Accommodation (PBSA) in Sydney, Savills Sydney student accommodation director Conal Newland said..

The high occupancy levels, robust revenue growth and attractive yield pricing make student accommodation is an attractive investment, he concluded.

The result of the growing levels of investor activity has meant that the student accommodation market is changing rapidly. 

Savills research indicates that more than $2 billion of capital has been earmarked for development projects across Australia since the start of 2015. 

Several new institutional investors have entered the market including Blue Sky Private Real Estate, Cedar Pacific, Global Student Accommodation, Scape, Valparaiso and Wee Hur. They have joined the likes of Unilodge, best known for their Central Park, Chippendale offering.

There are currently 67,695 PBSA beds in the eight Australian capital cities. All cities have an existing supply of less than 12 percent per full-time student with the exception of Canberra's 27 percent.

Melbourne and Brisbane have the largest development pipelines.

Sydney has a limited pipeline over the next four years with an additional 3,665 beds, of which around 38 percent are proposed by universities.

Savills nominated Urbanest as the most active off-campus developer with three properties completed since 2015 and another two in development.

Sydney saw 3,200 beds delivered in 2015 with these new properties trading at circa 70 percent occupancy in their first semester of operations.

In 2016 the average occupancy levels are at above 90 percent.

A number of universities, including the University of Western Sydney have commenced on-campus projects.

UNSW has been active delivering new halls of residence at the Kensington Campus in 2014 and 2015.

University of Sydney is an increasing participant – particularly at lower rental levels with the delivery of the Queen Mary building and weekly rents less than $300.