Rapid growth in student housing demand presenting opportunities for developers: Knight Frank

Rapid growth in student housing demand presenting opportunities for developers: Knight Frank
Rapid growth in student housing demand presenting opportunities for developers: Knight Frank

Australia’s student housing sector is set to boom in coming years, according to a report from Knight Frank.

Australia’s PBSA (purpose built student accommodation) sector is undergoing "rapid growth" due to an increasing number of Australian and international university students.

This year, over 8,000 new PBSA beds will become operational across Australia, approximately 20% more than in 2017.

Demand is outstripping supply with a growing population of both local and international students strengthening current demand.

According to the Australian Bureau of Statistics, the number of 18-25-year-olds in Australia is projected to increase by 104,000 between 2016 and 2026, increasing the number of Australian university students.

Chinese Higher Education enrollments in Australia could more than double by 2027; rising from the current figure of 124,700 to 294,000 enrollments according to Knight Frank Research estimates.

Knight Frank’s Paul Savitz, Director, Research and Consulting, Australia, said that speculation about the negative impact of high-ranking Chinese universities is unwarranted.

"There has been speculation of late that because Chinese global university rankings are improving, that this may have negative consequences for Australian universities; given their part reliance on full-fee paying international students," Savitz said. 

"However, when students are looking to study abroad, research shows that lifestyle factors are equally as important as the quality of education and because Australia offers international students a fantastic lifestyle with excellent employment opportunities, we have every confidence international student numbers will continue to rise."

In addition to freestanding PBSA developments, an additional opportunity for developers lies in upgrading existing university accommodation.

As a result, it’s expected that some of the largest investment opportunities will be in partnership with regional or metro universities to redevelop older on-campus stock.

Recent examples of public-private partnerships include the Living + Learning Partners consortium investment in the University of Wollongong’s on-campus student accommodation facilities, and ANU’s agreement with investment management firm H.R.L Morrison and Co over nine student residences.

The report suggests that establishing long-term partnerships with universities is the key to success in the PBSA sector.

"Whether it’s upgrading university accommodation or targeting overseas students in the direct let market, the key is developing long term relationships with universities to help meet their specific needs and investors and developers who are able to match a university’s vision will benefit long term; much more than those who simply target particular cities,” Savitz said. 

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Knight Frank Student accommodation

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