Housing to gain as Australia has fastest rise in foreign student population: Savills

Housing to gain as Australia has fastest rise in foreign student population: Savills
Housing to gain as Australia has fastest rise in foreign student population: Savills

The Australian student housing market is set to gain from the fastest growing foreign student population in the world next year, creating a significant development and investment opportunity for domestic and international organisations, says new research by global real estate advisor Savills.

Enrolments by foreign students in Australia rose 10.1% to 348,000 enrolments in the year to March 2015, while its student housing sector recorded annual growth in the volume of beds of 4.3% between 1999 and 2014.

The number of beds is projected to grow at an annual rate of 4.7% to 2018 but the sector is expected to suffer a supply shortfall with the provision of purpose-built accommodation currently at just 7%.

The market therefore offers major development and investment opportunities, although competing bids from residential projects for sites in major cities such as Melbourne and Brisbane may drive up costs.

Typical prime initial yields stand at 7%, much higher than the UK (5%) and the US (5.75%).

Savills’ World Student Housing report says Australia is the third biggest destination for foreign students globally, and the third-most popular destination for Chinese students after the US and Japan.

Attracted by an enviable, if comparatively expensive, quality of life, globally-recognised institutions and relative proximity to south-east Asia, Australia’s student population is set to increase exponentially in the coming decades, it says.

“With the US market having reached maturity, and the UK having reported record investment volumes of $ 6.5 billion in the first three quarters of 2015, Australia’s growing popularity among students globally offers a potentially new and exciting opportunity," said Marcus Roberts, director of student investment and development.

"We’ve already seen some landmark deals in Sydney, Melbourne and Brisbane, but the market is relatively immature compared to the US and UK, and therefore presents good prospects for entrepreneurial capital and cash-rich organisations which have already cut their teeth in the US or UK."

He had a word of caution for investors, though, because the Australian government’s intention to remove the cap on tuition fees from 2016 could dent the country’s popularity.

Investment Housing Market


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