Sydney student accommodation in short supply

Sydney student accommodation in short supplyWhile Australia is one of the world’s most attractive destinations for international students, the pipeline of student accommodation in some markets has not kept pace with demand, finds latest research from Savills.While international students now count for a third of Australia’s university population, and international education activity contributing more than $20 billion a year to the national economy, the student accommodation market is still in its infancy.”In comparison to mature markets, Australia’s provision of high quality, purpose built accommodation is coming off a really low base,” says Conal Newland, Savills director of student accommodation.While the development pipeline is growing in all capital cities, Newland says the “biggest challenge is feasibility, particularly in incredibly buoyant residential markets like Sydney”.”Making the numbers stack up has been very challenging for private developers.”Latest research from Savills, which Newland says is “hot off the press”, reveals a total pipeline of around 5,300 beds in Sydney. This figure includes properties under construction, with development approvals, as well as speculative developments, and “there’s a chance that some of those developments will not proceed”.In comparison, Melbourne has nearly 15,800 beds in the pipeline. “We’ve seen a lot of activity in the Melbourne market, particularly developers acquiring sites in proximity to RMIT and the University of Melbourne. There is the potential for nearly 7,0 beds to be delivered in Melbourne in 2019, which will have a profound impact on the market.” Why is Melbourne’s pipeline triple that of Sydney? “The demographic profile in Melbourne is incredibly strong, but what it comes down to is site availability and the price of land,” Newland explains.The NSW Department of Industry Trade and Investment has established a working group of policy-makers, industry representatives and universities to identify options to increase the supply of affordable student accommodation, Newland adds.In Brisbane, council concessions for student accommodation introduced two years ago are beginning to bear fruit, with more than 11,000 beds in the pipeline. In Perth, around 3,600 are underway, while Adelaide’s 2,200-odd beds reflect demand and the fact that “rental prices are lower, which affects the feasibility of these projects”.Newland has just returned from attending an international student conference in London, and says rental affordability was one of the “headline discussions”. Developers are looking at new types of accommodation offerings, such as twin rooms and smaller bedrooms that are offset by larger communal spaces.”Millennials tend to work, study and socialise in different ways to previous generations, and that is being reflected in new accommodation offerings.”Newland points to Urbanest’s Darling Square development in Sydney, where he says “the hierarchy of communal areas is really interesting”. Residents can choose from a range of spaces, from the large social areas on the ground floor to a rooftop terrace. There’s a games and cinema room, and a fully-equipped gym.Are the new private operators changing the expectations that students have of their digs?Today’s students are global travellers who may spend each year of their degree in a different country, Newland says. This gives them the chance to experience a range of accommodation types, which is influencing their expectations. At the same time, the major players in Australia’s market – such as Urbanest, Campus Living Villages and Scape Living – are also active in other international markets, and this has led to “cross-fertilisation of ideas”.Newland says a “lively market” of on-campus transactions is also underway, as universities partner with private operators to develop additional accommodation.”Of the current pipeline, about half is being developed by universities, and this is absolutely critical for the future provision of new accommodation.”So where do the future opportunities lie?Newland says universities should be looking to work with the private sector to leverage opportunities on campus, such as existing buildings that can be refurbished or redeveloped. Mixed-use developments will also become hot spots for students, and Newland points to Frasers Property Australia’s work at Central Park as an example of where the market is headed.