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Investor interest in student accommodation surged in 2025, with sales volumes increasing 15,000 per cent over 2024, fuelled by growing student populations and a persistent undersupply.
Knight Frank’s latest Australia PBSA Update for Q2 2025 showed a resurgence in interest in purpose-built student accommodation (PBSA), with investment volumes in 2025 totalling $1.8 billion across four deals, compared to $116 million in 2024.
Knight Frank’s head of alternatives, Tim Holtsbaum, said that while the 2024 challenging economic climate and uncertainty over international student caps slowed transactions, volumes are expected to pick up in 2025.
“Operational schemes remained tightly held in 2024, however, and owners that did bring assets to the market were rewarded with competitive bidding due to a lack of opportunities for buyers, which helped to maintain robust pricing levels,” Holtsbaum said.
According to the report, policymakers and stakeholders have been supportive of PBSA growth following rising student population and pressure on the broader rental market.
“This year we have seen a resurgence in investor interest in the sector, with investors viewing it favourably due to its strong fundamentals, including the undersupply dynamics, student growth and counter-cyclical features, with the prospect of good risk-adjusted returns,” he said.
Earlier in April 2025, North American investor Greystar acquired the GIC-Wee Hur JV portfolio, which comprised 5,662 beds across seven assets, for $1.6 billion, making up the bulk of the PBSA investment.
“Recent transactions have demonstrated that stabilised PBSA assets remain a key target for investors trying to enter or consolidate their position in the Australian market,” Holtsbaum said.
The report found there are currently 6,912 beds under construction, including 2,772 beds due for completion in 2025, representing a 40 per cent increase to 2024.
Additionally, another 5,832 new beds are expected in 2026.
According to Knight Frack, increased public-private partnerships with university have been expected to support demand for quality student housing and address affordability challenge.
While data has shown a renewed interest in the student accommodation market, Knight Frank chief economist Ben Burston said Australia’s upcoming elections and policies would be key to the sector’s growth.
Last year, the Labor government proposed a bill to cap international student enrolments at 270,000 from January 2025, following migration and housing pressures.
While the Labor bill failed to pass, the Coalition also pledged to reduce international student number further to 240,000 as well as increasing student visa fees.
“Against this backdrop, investor confidence remains strong due to buoyant student demand, with international student enrolments well above pre-pandemic levels and near double the levels of a decade ago. This will aid strong occupancy levels this year,” Burton said
ABS figures showed that in December 2024, there were 1,095,298 international students enrolled in Australia, representing a 15 per cent increase in enrolments compared to pre-pandemic levels.
Data found that 55 per cent of international students originated from five main countries: China with 22 per cent, India 16 per cent, Nepal 8 per cent, the Philippines 5 per cent, and Vietnam 4 per cent.
The surge in international students has also increased the average rental for PBSA studio apartments, which has increased by 50 per cent in Sydney, 38 per cent in Melbourne, 36 per cent in Adelaide, and 28 per cent in Brisbane since 2018.
“The student accommodation sector has experienced strong rental performance due to the demand-supply imbalance in the market, and the market is expected to remain undersupplied despite rising development activity,” Burston said.
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