New CBRE data points to opportunities in the student accommodation sector

One hundred and eighty thousand. That’s the estimated number of extra Purpose-Built Student Accommodation (PBSA) beds that would be needed to house every renter attending Australia’s leading universities, according to a new CBRE analysis.

While not every student wants to live in a PBSA facility, CBRE’s Accommodating the Growth in Students report highlights a significant opportunity to scale-up, which is most stark in Sydney.

CBRE’s Pacific Head of Research Sameer Chopra noted, “There is still significant room to boost supply, with a potential opportunity size of up to 180,000 beds across Australia’s major cities. This, combined with the sector’s scope for rent growth and falling cap rates over the medium term, is underpinning rising investor interest in portfolio acquisitions and new developments.”

To arrive at the figure of 180,000, CBRE compared the number of overall student renters at 11 Australian universities to the number of surrounding PBSA beds.

And the shortfall isn’t just confined to the universities surveyed, with CBRE estimating that that just 6% of students are able to live on or close to a university campus in PBSA accommodation.

“The current Australian pipeline of 28,000 PBSA beds between 2025 and 2028 falls well short of what’s needed to meet demand. While it will increase the number of beds by 28% nationally, we estimate there is ~10k of unmet demand for PBSA in Melbourne’s CBD and inner north and ~25k of unmet demand in central and inner-west Sydney,” Mr Chopra said.

On the investment front, CBRE’s report highlights that median rents for PBSA studios grew at CAGR 5.5% across Melbourne and Sydney over 2018-2024.

Andrew Purdon, CBRE’s Regional Director, Living Sectors Capital Markets, Pacific said rental growth, resilient occupancy rates and Australia’s position as a top four global destination for higher education was helping to drive robust investor demand.

“With structural undersupply across key university precincts—particularly in Group of Eight cities—the investment thesis remains compelling for both domestic and international capital,” Mr Purdon said

“Unlike other real estate asset classes that have seen yield expansion in response to higher interest rates, PBSA has demonstrated remarkable resilience. Occupancy rates and rental growth have remained strong post-COVID, supporting stable investment yields and reinforcing the sector’s defensive characteristics. As the interest rate cutting cycle proceeds, there are good prospects of cap rate compression in PBSA.”

Mr Purdon noted that capital was actively seeking completed assets in core education markets. However, limited availability was prompting both new entrants and established PBSA platforms to pivot toward development opportunities, signaling continued growth in the sector.

Bed Supply Shortfall Across Sub Markets