Australia's student accommodation supply set to increase

Supply of Purpose-Built Student Accommodation (PBSA) could increase by one third on current volumes over the next few years if all planned projects proceed, new CBRE analysis shows.

CBRE's Accommodating the Growth in Students report notes supply is forecast to increase by 34,000 beds across Australia from 2026-2029. 

Melbourne accounts for 28% of supply followed by Perth at 22% and Sydney with 20%.

While this is an uplift of one third on current supply, there remains a significant pool of unmet demand for PBSA in Australia with a shortfall of approximately 185,000 beds.

Australia’s intake of international students is expected to be broadly flat over the five-year period from 2023-2027. Nearly one in three students in Australian universities is an international student. CBRE assess the penetration of PBSA is 7% of students in Australia. This is relatively low in a global context.  

The report notes since 2022 student accommodation rents have increased substantially, along with a recovery in international student numbers.

CBRE's Head of Research Pacific, Sameer Chopra notes newer and highly amenitised stock, which students prefer, is providing a boost to average market rents.

"Student accommodation rents are currently at a 12% premium to rents for two-bedroom apartments in the same precinct," Mr Chopra said. 

"Today, nearly a quarter of PBSA standard suites have rents above $700/week.  This used to be a phenomenon in Sydney and Melbourne but we’re seeing similar new stock with higher rents in Adelaide, Brisbane and Perth.

"The premium rents are explainable as purpose-built student accommodation is usually furnished and offers utilities like electricity and wi-fi, breakfast and coffee facilities, community and social activities, safety and security like CCTV and card swipe access, as well as amenities including gym and study areas," he added.

CBRE assess the median rent for a sample of student accommodation studios in Sydney and Melbourne properties grew at CAGR 5% over 2018-2026. During 2026, national rent growth was low single digit, with Brisbane pacing higher than Melbourne and Sydney.

CBRE Director, Living Sectors – PBSA, Valuation and Advisory, Rosie Young notes cap rates for PBSA assets in Australia have been broadly stable over the past 18 months, despite the volatility in interest rates which impacted other sectors.

“Whilst there have been some operational challenges facing the PBSA sector this year with the introduction of increasingly tenant friendly legislation, making it easier and cheaper for tenants to terminate agreements early, yields have proven to be surprisingly resilient despite the higher rate environment. Investors are taking a long-term view with the fundamentals of the living sector and PBSA still proving highly appealing,” Ms Young said.