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Accommodating the growth in students

Demand, supply and pricing for Australian PBSA market

August 24, 2023 7 Minute Read

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Australia is deeply under-penetrated with just 1 purpose built student accommodation (PBSA) bed for every 16 students. The number of international students studying in Australia has almost fully recovered to pre-COVID rates. CBRE estimates that an incremental 8,000 rooms could be delivered over 2023-26, representing a 7% uplift to the current volumes of rooms. This is far short of demand.


Median rents for student accommodation studios grew at CAGR 5.5% from $406 per week to $530 per week over 2018-2023 across Brisbane, Melbourne and Sydney markets, per CBRE data. We assess student accommodation rents are at a 15% premium for two-bedroom apartments in the same precinct. This is understandable as PBSA apartments are fully-furnished and include utilities, social events and pastoral care. CBRE forecast rent growth in inner city living sectors will continue to outperform inflation, with private rental market vacancy likely to remain sub 1%. 


Rent growth and resilient occupancy has helped to cushion yields and valuation in the face of rising financing costs.  Globally, PBSA yields have expanded by circa 30 bps off their mid 2022 lows. Transaction activity is starting to pick up in Australia, with cap rates that are likely to be 50-75 bps over comparable multi-family product.