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According to the acting executive director of the Student Accommodation Council, Adina Cirson, Australia’s “need to increase housing, for both domestic and international students, has reached a critical stage”.
Her comments follow a recently published report by commercial real estate outfit, CBRE, which revealed that even with an expected 7 per cent uplift in the volume of rooms available for purpose-built student accommodation (PBSA) between 2023 and 2026, a severe shortage of stock remains.
With a wider housing crisis raging across all corners of the country, highlighted by the National Housing Finance and Investment Corporation (NHFIC) revealing the nation’s housing supply shortage is set to exceed 100,000 homes in the coming years, Ms Cirson stressed there is also “an acute shortage of dedicated student housing”.
She detailed how “over 76,500 students in Australia are living in some 200 PBSA developments, most of which are full – with a third of beds leased to domestic students”.
This data indicating the chronic shortage of PBSA is supported by revelations from CBRE that just one PBSA bed exists for every 16 university students across the country.
It cannot be understated how crucial these beds remain for Australian university students, both domestic and international, given the number of university enrolments are nearing their pre-pandemic levels.
According to CBRE’s Pacific head of research, Sameer Chopra, international enrolments were just 6 per cent below the pre-COVID-19 peak in April this year. And while Mr Chopra acknowledged “enrolments do not directly equate to accommodation demand, as students may be enrolled in multiple courses or in some cases studying online, there’s a clear trajectory of demand”.
This trajectory of demand was exacerbated further earlier this year with the Chinese government’s decision to not recognise academic degrees and diplomas where studies were undertaken online, which further stretched the already limited availability of Australian PBSA and other rental properties.
Australia’s PBSA supply remains significantly lower than other major global cities such as London and Paris. Mr Chopra revealed the issue is compounded by “the fact that vacancy rates in alternative inner-city apartment stock is forecast to stay sub 2 per cent”.
Boasting over 36 per cent of the national PBSA stock, Melbourne is the nation’s most popular capital for university students. However, CBRE revealed Sydney is predicted to have a larger development pipeline, which could result in the NSW capital accounting for approximately 50 per cent of new room supply over the three years from 2023 to 2026.
In Ms Cirson’s view, all levels of government should see PBSA in the same light as build-to-rent (BTR), which has been viewed as a crucial component in easing Australia’s present housing ailments.
“PBSA is a unique asset class, and governments need to provide clear planning approval pathways and consider extending the generous land tax and regulatory treatments that have been afforded to BTR developments,” she said.
On top of this, she believes: “We need to see more land releases dedicated to development of student housing.”
“Unlike BTR, PBSA is already a scaled, sophisticated sector and is able to respond to the current situation rapidly if these barriers are removed,” she added.
For private investors, CBRE’s report indicated that rent growth and resilient occupancy has cushioned PBSA yields across the globe even in the face of rising costs.
According to CBRE director, PBSA valuations, Rosie Young: “Student accommodation is counter-cyclical, so when other property asset classes start to slow, the PBSA sector continues to perform well”.
Data from CBRE found median rents for student accommodation jumped from $406 per week to $530 per week over 2018 to 2023 in Brisbane, Melbourne and Sydney.
Ms Young added the “sentiment is very positive and we’re seeing considerable interest from investors looking to redeploy capital out of the traditional office, retail and industrial sectors into the living sectors, namely PBSA and BTR”.
MS Cirson believes alleviating pressures on the PBSA sector, which she billed as “an enabler to the higher education sector”, will generate a “positive contribution to the broader economy”.
“We will be continuing to advocate at the federal, state/territory and local government levels to ensure our political leaders understand what needs to be done to get more housing for students, and how our sector can help ease market pressures,” she concluded.
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