Australia a magnet for international students
Australia now ranks as the third most popular global destination for students studying abroad, fuelling demand for student accommodation across the country, finds new research from Savills.
According to Australian Student Accommodation Market Report, 554,179 international students were studying on our shores in 2016, up by 10.9 per cent on the previous year.
Chinese students now account for 28 per cent of international students, followed by students from India (11%), the Republic of Korea (4%), Thailand (4%) and Vietnam (4%).
Australia’s eight largest capital cities have 71,645 beds in purpose-built student accommodation. The existing supply in each city is less than 11 per cent of the full-time student population, with the exception of Canberra, which has enough for 28 per cent.
According to Savills director Conal Newland, Sydney is the most attractive Australian market for investment, driven by a significant supply and demand imbalance, world-class universities and global city status. The total development pipeline in Sydney has increased from 3,665 beds in 2016 to 5,435 beds in 2017.
In Melbourne, the pipeline has shot up from 9,651 beds in 2016 to 16,295 in 2017. This has been driven by the availability of development sites and the University of Melbourne’s 2020 strategy.
Activity in Brisbane has slowed after two years of significant increase in supply. Analysis indicates that the total pipeline has risen from 8,930 beds in 2016 to 10,682 in 2017.
In Adelaide, 2,159 beds are in construction, with projects from Blue Sky, Kyren Group and Urbanest slated for delivery in 2018.
Interest in the Perth market has increased over the last year, and the pipeline has grown to 3,621 beds, including projects with Stirling Capital, Cedar Pacific and the first stage of Curtin University’s mixed-use building.
Savills says the existing supply and development pipeline come off a much lower base than in other parts of the world, notably the United Kingdom.
A record level of transactions contributed to global student accommodation investment of nearly AUD$18 billion in 2015. Of that $7.7 billion was in the United States, and $2.5 billion in Western Europe. Looking forward, transaction volumes in the UK alone could reach $8.5 billion in 2017.
Rachel Coates, associate director with Savills, says Australia’s market is “still at an early stage” both in terms of volume and total value of transactions.
Record numbers of investors are looking to access the Australian student accommodation market, however Savills says “opportunities are at this stage limited”.
The delivery of new accommodation, particularly in Melbourne and Brisbane, will be “closely watched”, Newland adds.