Yields for Australian student accommodation likely in downward cycle: Savills

Yields for Australian student accommodation likely in downward cycle: Savills
Yields for Australian student accommodation likely in downward cycle: Savills

Investors are moving beyond the traditional core markets and seeking alternative asset classes such as student accommodation where the fundamentals are strong, says the 2016 Australian Student Accommodation Market Report.

Growing investor and undersupply of student accommodation means that the market is changing rapidly. Savills research indicates that more than $2 billion of capital has been earmarked for development projects in student accommodation across Australia since the start of 2015.

Yields

Current Indicative International Yields

The following table provides an indication of Net Initial Yields for prime student accommodation investments across several countries with emerging and established markets as at March 2016. The spread of the prime yield to 10-year bond clearly illustrates a lower spread for the more mature and liquid markets of the USA and the UK. 

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Yields for Australian student accommodation likely in downward cycle: Savills

Australia

Net Initial Yields in Australia have remained relatively static over the last 12 months, primarily due to the lack of transactional evidence. There is strong sentiment to suggest that yields are in a downward cycle, given the weight of capital that has entered the market and also the spread of current yields to the 10-year bond rate compared to more mature transaction markets. 

The following table indicates the current net initial yields for Australia in 2016:

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 Yields for Australian student accommodation likely in downward cycle: Savills

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Student Housing Commercial Investments

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