Australia's student housing plays catchup to meet foreign students influx: Savills
Australia is a popular destination for international students, particularly from Asia.
China and India together supply nearly 40 percent of international students, an increase of more than 13 percent and 15 percent respectively in 2015.
Total higher education enrolments grew by 2.7 percent over the same period.
Growing demand is set against a general shortage of supply. The provision rate stands at 6 percent, which is low compared to mature markets such as the UK at 24 percent. In response, a number of universities have commenced on-campus procurement projects and private operators are rapidly expanding their pipeline.
More than AU$2 billion of capital has been earmarked for development projects in student accommodation since the start of 2015. The top ten providers currently own a total of 20,136 beds and have a combined development pipeline of 15,469, representing an increase of approximately 75% on their existing stock.
Scaling up on new delivery presents challenges. Competing land uses, particularly from a strong residential sector, have pushed up land values and made development for PBSH unviable in some markets, most notably Sydney.
Federal and state governments have recognised the shortage as a limiting factor in the future development of the country’s higher education sector (already Australia’s third biggest export, after iron ore and coal), and a number of strategies to enable new development are in the pipeline.
As an emerging market for student accommodation, transactional activity is limited as completed assets are generally tightly held. Savills research indicates there were just two transactions of operational residences totalling nearly AU$90 million in 2015.
In 2016, Infratil (HRL Morrison) secured a 30 year concession of ANV’s portfolio of 3,760 beds and UniLodge @ UNSW was transacted at a net initial yield of circa 5.6 percent.