Sydney most attractive for investing into student accommodation: Savills
Sydney is the most attractive Australian market for investment into the student accommodation sector, according to Savills.
The total development pipeline in Sydney for student accommodation has increased to 5,435 beds in 2017 from 3,665 beds in 2016, according to the recent Student Accommodation Market Report from Savills.
The supply and demand imbalance, world class universities and status as a global city are the main factors that are driving student accommodation in the Harbour City.
However, there are significant barriers to entry, the report notes.
The value of land associated with competing land uses, primarily residential in CBD fringe locations, continues to be an issue for private sector developers.
This has led to developers seeking locations outside of the CBD, primarily around transport hubs. The University of Sydney continues to be a significant participant within the Sydney market, with several new developments proposed.
The most significant purpose-built student accommodation (PBSA) completed this year has been Urbanest (picture above), delivering the first stage of their accommodation within the Darling Square precinct comprising 634 beds.
Their second stage of that project comprising 664 beds is programmed for completion during 2018. This will be the first off-campus fully catered accommodation available to the market.
Analysis of the development pipeline by room type indicates that approximately 30% of the new accommodation will be provided in the most expensive form of accommodation, which is self-contained studios.
The remaining accommodation will be provided in shared apartments, with approximately 34% of the pipeline in dormitory style rooms which is primarily influenced by the University developments.
“The affordability of student rents influencing the financial viability of delivering new accommodation will continue to be a critical issue for the Sydney market throughout the next 12 months,” says the report.
“Delivering new student accommodation within mixed use developments, such as Central Park and Darling Harbour will, in our opinion, be the main source of new opportunities in Central Sydney.”
Read the report here.