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Scape Lincoln College near the University of Melbourne in the city’s Carlton neighbourhood
International students in Australia have surpassed their pre-COVID numbers, delivering a boost to purpose-built student housing and driving a reallocation of capital into the sector, according to JLL.
Last year saw the number of international students exceed the previous 2019 peak by 4 percent, fuelled mainly by China and India, with exceptional growth in students from the Philippines (up 107 percent), Colombia (up 94 percent) and Pakistan (up 54 percent), JLL said Monday in a release.
“Australia’s consistently strong university rankings, connectivity to Asia, and the quality of student life have all been key pull-factors for international students studying in Australia,” said Jack Bergin, head of living on the Australia capital markets team at JLL. “These factors have contributed to the growing interest from capital in the sector, with further investment in the space expected in the short to medium term.”
The property consultancy’s latest report points to the need for more student housing supply to ease pressure on Australia’s tight private rental market, where the residential vacancy rate has declined to a historic low of 1.1 percent and asking rents have jumped 10.5 percent year-on-year in the past 12 months.
Supply Interruptions
The last major supply wave of purpose-built student housing was from 2016 to 2019 as roughly 5,200 beds were completed a year, JLL said in the report.
Jack Bergin, head of living on the Australia capital markets team at JLL
Annual completions had been expected to trend slightly downward from 2020, but pandemic-era shutdowns delayed some 2020 and 2021 openings into 2022. An average of 3,500 beds a year are anticipated to complete from 2024 to 2028, but many may be deferred as development feasibility remains a challenge, according to the consultancy.
“While demand is obviously there, as is rental growth, the pressures from high construction, finance and land costs are impinging on development margins and impacting viability,” Bergin said.
The report noted that the surge in investor interest during the previous 24 months has seen new players enter the market and existing players expand portfolios and increase their exposure to living-sector real estate.
One significant entrant was US investment giant Blackstone, which acquired the Student One portfolio from Valparaiso Capital in 2023 for A$530 million (now $348 million) in a deal advised by JLL. The acquisition comprised three premium student housing assets with a total of 2,300 beds in Brisbane’s central business district and a 40-person integrated management company.
Existing student housing players like Scape, Iglu, Brookfield, Australian Unity, Centurion and Nuveen continue to seek suitable development sites in well-connected locations across the country, JLL said.
Oz Panel to Share Insights
Student accommodation and build-to-rent housing will be in focus during a panel discussion on Australia as part of Mingtiandi’s APAC Residential Forum 2024.
The one-hour programme on MTD TV will feature Dan McLennan, founder and co-CEO of Local Residential; Keith Lucas, managing director of Sentinel; Stephen Gaitanos, managing director and group CEO of Scape; and Alek Misev, head of property at Aware Super.
The presentation, which is sponsored by Yardi, will stream live at 10am Hong Kong time on Thursday, 28 March, and conclude with a live Q&A session in which viewers can quiz the speakers on their market outlooks.