Education sector driving Brisbane development ‘boom’
Education sector driving Brisbane development ‘boom’
9 December 2015
Brisbane, 10 December 2015 – Brisbane is positioning itself as Australia’s education centre, with a swag of developments underway across the city set to entice students to study in the Queensland capital.
A new CBRE Viewpoint highlights how local governments are becoming increasingly strategic as they vie to attract new development by lowering infrastructure charges, with the education sector identified as a key growth area.
CBRE Research Analyst Tom Broderick said Brisbane City Council was proactively looking to capitalise on the booming education market by driving growth in this area.
“With a lower Australian dollar, education has been highlighted as a key export for Australia, which governments have been keen to take advantage of,” Mr Broderick said.
“As part of their strategy to encourage students to come to Brisbane, the council has reduced infrastructure charges for new student accommodation developments by up to 80%.
He added: “This strategy has spurred an influx of development applications lodged for student accommodation across the city, ultimately enabling Brisbane to capture a large portion of this growing market.”
From 2006 to 2013, there were 194 rooms in purpose built student accommodation developments completed in Brisbane, while simultaneously student enrolments increased by approximately 32,000 students.
“Brisbane’s student accommodation shortage has forced many students into the residential rental market,” Mr Broderick said.
“However, since infrastructure contributions have been reduced, there has been a significant increase in development applications lodged, with almost 4,500 rooms applied for in 2015 alone.”
CBRE Associated Director, Office Services, Mel Pikos said there had been a significant spike in demand from schools, colleges and TAFES looking to lease commercial space across the city.
“Education providers are increasing their capacity and market share across Brisbane, with this sector now presenting one of the largest net absorbers of accommodation in Brisbane,” Mr Pikos said.
“With students increasingly attracted to Australia, we anticipate that the sector will continue to grow. In many instances, we are seeing some colleges quadruple in size, with others expanding into Brisbane from Sydney and Melbourne realising the opportunity to grow.”
The report shows undertaking student accommodation developments in Brisbane have become so appealing, some investors are looking to the office market for conversion opportunities.
Highlighting 363 Adelaide Street in the CBD, Mr Broderick said repurposing assets for higher and better use was a trend expected to gain momentum.
“Such is the strength of incentives at the moment, 363 Adelaide Street was acquired for conversion, given the high secondary office vacancy in the CBD at present,” Mr Broderick.
“While this trend has been previously more prominent in Melbourne and Sydney, these incentives imposed by the government are improving the feasibility of such a development.”
The CBRE Viewpoint shows the trend is emerging across the state, with other local governments undertaking similar measures in a bid to encourage development.
Cairns Regional Council introduced an infrastructure charges incentive program in 2014 as part of a strategy to encourage development following the GFC.
“This program was designed to progress projects valued over $15 million by offering a waiver of up to 100% of infrastructure charges,” Mr Broderick said.
Projects to be completed in 2016, worth $15 million and above, are expected to total $110 million, compared to just $20 million in 2014.
In 2014, the Fraser Coast Regional Council introduced an incentive program to attract investment to the region.
This included discounts of between 10% and 30% for commercial developments and extended payment for residential subdivisions.
Project completions in 2014, after the scheme was implemented, totaled $171 million worth compared with just $31 million a year earlier.
The Gold Coast has experienced a flurry of development over the past three years, after infrastructure contributions were discounted by up to 100%.
Approximately $785 million worth of construction activity has occurred since 2012 as a result.
In addition to the current student accommodation scheme, the Brisbane City Council offered discounts to infrastructure contributions for four and five star hotel developments.
Subsequently, since 2011 Brisbane has welcomed a host of new developments, including the Four Points Hotel in the CBD, the Pullman Hotel at the Airport and the Rydges Hotel at the RNA Showgrounds.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.