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Despite a projected uptick in purpose-built student accommodation (PBSA), Sydney and Melbourne will remain 50,000 beds short.
CBRE’s Australian Student Accommodation 2024 report has predicted an ongoing shortfall in student accommodation across Australia’s major education hubs in coming years.
Between 2024 and 2027, PBSA stock Australia-wide is projected to increase by 19,000 beds, with Melbourne (30 per cent), Sydney (25 per cent) and Brisbane (20 per cent) seeing the majority of the new supply.
In addition, the federal government has introduced a bill to tighten visa regulations for international students.
Despite this, CBRE forecast that the supply of PBSA will continue to fall short of student demand in the years to come.
Sameer Chopra, CBRE’s Pacific head of research, noted that the ongoing shortfall would present both challenges and opportunities for the Australian property sector.
“If the proposed legislation rebalances genuine student migration, who are also more likely to reside in PBSA in the early part of their Australian studies, it is likely to have a positive impact on the PBSA sector,” Chopra said.
“There is also an opportunity for the sector to capture the overflow demand of the increasing numbers of domestic students studying interstate and seeking PBSA because of diminishing supply of private rental sector accommodation.”
However, unless the accommodation sector acts quickly, housing conditions for students are likely to remain dire.
“Demand for PBSA in Australia is higher than ever and the current PBSA ratio is approximately 6 per cent, or one bed per 15 students,” Chopra revealed.
“We estimate there is an acute undersupply of PBSA, particularly in Sydney and Melbourne where Australia has the largest concentration of university students.”
In Melbourne, the CBD catchment areas around the University of Melbourne and RMIT has 17,700 beds of PBSA – or a shortfall of 15,000 to 20,000 beds, according to CBRE.
Meanwhile, the University of Sydney and UTS catchment areas in Sydney’s CBD and inner west have 12,400 beds, equivalent to unmet demand of 25,000 to 30,000 PBSA beds.
With demand continuing to outpace supply, investors who operate in the student accommodation sector can continue to expect strong asset performance.
Rosie Young, CBRE valuations director, stated that PBSA “continues to perform well, with rents increasing significantly across the market”.
“This has been driven by the continued low vacancy rates in the wider residential market and we are seeing this replicated across all key capital cities,” Young said.
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