Investors eye new potential as student accommodation supply grows
The pipeline of dedicated student accommodation beds has increased in Australia, with Melbourne taking the lion’s share of the market.
New figures from the Property Council of Australia and Urbis show that student accommodation bed numbers have grown nationwide by 5,605 since semester one last year.
The pipeline of student-only beds now totals 35,605, with 14,938 more beds approved for development and 9,565 waiting for approval.
Across states, Melbourne leads the pipeline with the largest share of student accommodation beds, totalling 8,875, followed by Brisbane with 7,118 beds, and Sydney with 6,849 beds.
In the smaller capital cities, Perth and Adelaide will add 5,354 and 3,121 beds, respectively, while the ACT has 406 beds in the pipeline.
Investors in the private sector continue to drive student housing developments nationwide with 9,492 beds under construction.
Student Accommodation Council executive director, Torie Brown, said investors remained confident despite ongoing debates and visa reform regarding the migration of international students.
“The private sector continues to be the engine room for new student accommodation developments, delivering critical beds and reducing pressure on the private rental market,” Brown said.
“The need for more dedicated purpose-built student accommodation (PBSA) is clear, and the investor fundamentals in Australia are strong.”
While both political parties have planned to reduce the migration of international students, the Student Accommodation Council said the easiest way to ease the private rental demands is to boost the PBSA market.
Additionally, Brown said that while most projects will be completed in 2027, expedited planning and addressing restrictive tenancy regulations will supercharge this timeline and bring beds to fruition quicker.
“We have the capital ready to deploy. We don’t need handouts. We are a solution to housing pressures for students and neighbourhoods.”
“We should be treated as an asset class of priority by governments at all levels,” she said.
A December report on student accommodation by Savills revealed that Australia continues to face a significant undersupply of student housing in terms of volume, variety of accommodation types, and pricing.
Each year, international students have a $50 billion-plus impact on the Australian economy across all sectors.
Investors who eye student accommodation can see a high yield return and growing demand as international students’ interest in Australian universities continues to increase.
Urbis director, Clinton Ostwald, said student bed completion has slowed down in 2024, while existing supply is concentrated in the three big cities.
“Projected completions are picking up over the next three years, with developers continuing to try and get into the tight Sydney market,” Ostwald said.
“Perth has also seen the pipeline increase significantly in the last 12 months as the market responds to the increase in international students and an undersupply in PBSA,” he said.