Over $1 billion of equity looking to invest in student accommodation market: JLL report

Less than one bedroom of purpose built student accommodation is available per 10 students, according to JLL’s Australian Student Accommodation Market Update for 2014, and there's $1 billion of equity waiting to find an opportunity in this market.

Source: Universities websites, JLL Student Accommodation Database 2014, ABS Census 2011, Department of Industry 2012, UCube, HESA 2011/2012

The graph above shows where students are currently living, with the majority opting to live with parents, rent or live elsewhere – such as in serviced apartments – as opposed to in university or commercial provisions. With student numbers increasing, this could be of further detriment to supply and perhaps open an opportunity for a student accommodation provider.

By 2020, growth is expected to result in a total of 760,000 international student enrolments in Australia, which is double 2012 figures.

Chinese students in 2013 made up a 29% share of international students, with 8.8% from India and 4.9% from Korea.

JLL director of student accommodation services, Conal Newland, said that purpose built housing by private sector operators is “primarily occupied by international students, at approximately 75%”.

“We anticipate the demand for purpose built student accommodation will increase as international student numbers continue to grow,” said Newland.

“International students bring differing requirements for the design and operation of student housing based on their experience of residential accommodation from their countries of origin and also by the way in which they socialise.”

He noted that this provides an opportunity for the provision of purpose built accommodation, and for domestic and international investors who attempting to enter the Australian market.

“We estimate there is currently over $1 billion of equity looking to invest in the Australian student accommodation market.  These investors are seeking both opportunities to invest on and off campus, existing assets and development opportunities,” he said.

With a lack of assets currently available, transactions have also been limited – bringing just three large transactions, totalling $250 million, in the past 12 months.