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Growing Demand in Student Accommodation Sparks Investment Interest in Australia – Image Credit Unsplash
- Australia needs 180,000 additional Purpose-Built Student Accommodation (PBSA) beds to meet the demand from university renters.
- The sector is attracting investment due to strong rental growth and resilient occupancy rates, especially in major cities like Sydney and Melbourne.
Australia’s hotel and travel industry is witnessing a surge in demand for Purpose-Built Student Accommodation (PBSA), with a significant shortfall of 180,000 beds required to accommodate students attending the nation’s leading universities. This gap presents a lucrative opportunity for investors and developers, particularly in major cities such as Sydney and Melbourne.
According to a new report by CBRE, the demand for PBSA is most pronounced in Sydney, where the current supply falls short of student needs. The report highlights that only 6% of students can find accommodation on or near university campuses, underscoring the urgent need for expansion.
Bed Supply Shortfall Across Sub Markets
CBRE’s Sameer Chopra emphasized the potential for growth in the sector, noting that the current pipeline of 28,000 new PBSA beds by 2028 is insufficient to meet the burgeoning demand. In Melbourne’s CBD and inner north alone, there is an estimated unmet demand of 10,000 beds, while central and inner-west Sydney require an additional 25,000 beds.
The investment landscape is promising, with median rents for PBSA studios in Melbourne and Sydney showing a compound annual growth rate of 5.5% from 2018 to 2024. Andrew Purdon of CBRE highlighted the sector’s resilience, noting stable occupancy rates and rental growth even post-COVID, which continue to attract both domestic and international investors.
As interest rates potentially decrease, the PBSA sector is poised for further investment, with capital actively seeking completed assets in core education markets. However, the limited availability of such assets is driving both new and established players to explore development opportunities, signaling continued growth and expansion in Australia’s student accommodation sector.
