Australian Student Accommodation 2024 (August Addendum)

Key Points:

The penetration of student accommodation in Australia is ~6% or one bed per 15 higher education students.  The Australian Government has announced the international student commencements for 2025 will be 270,000 across Higher Education and Universities. CBRE’s initial estimate of international student caps will see the University sector's 2025 commencements fall by -21% vs 2024 but +4% vs 2019 levels. 

While some students live at home, those that opt for student accommodation, typically prefer to live within walking distance or short-commute of Universities.  Our micro-analysis of catchments suggests:

• there is an unmet demand 25,000 PBSA beds in Central/Inner-West Sydney to support students at University of Sydney/UTS
• there is an unmet demand 15,000 PBSA beds in Melbourne CBD/Inner-North to support students at University of Melbourne/RMI

CBRE estimate 19,000 beds of new supply (Australia-wide) over 2024-27, which represents 18% uplift to current volumes. 

Median rents for student accommodation studios grew at CAGR 6% over 2018-2024 across Melbourne and Sydney markets. CBRE forecast rent growth in inner city living sectors will continue to outperform inflation, with private rental market vacancy likely to remain sub 2%.  
 
The Australian Government announced an intention to regulate the international student market.  Our view is that the Government is seeking to curb the growth of non-genuine students. Re-balancing student migration to genuine students, who are also more likely to reside in PBSA during the early part of their Australian studies, is likely to be constructive for the PBSA sector, in our view. 
 
Capital continues to pursue development as there are few opportunities to purchase stabilised operational stock in Australia. The sector has remained exceptionally resilient to the rise in bond yields.