Australia To Witness a Promising Landscape of PBSA Investments

The Purpose-Built Student Accommodation (PBSA) sector is gaining momentum in the expanding Australian real estate market, positioning itself as a highlight in the Australia student housing sphere. As more students show a growing preference for studying in Australia, the student housing market in the country is steadily expanding. The PBSA Australia market is consistently growing as it is welcoming more institutional investors along with a burgeoning economy of scale. According to the recent PBSA news report presented by CBRE, “Accommodating The Growth in Students”, the Australia student housing sector is expecting an addition of around 8000 Purpose Built Student Accommodation (PBSAs). This addition is expected to take place in the span of 2023 to 2026 across Australia. 

Following the global recovery in international student enrollment post-COVID, the rise in international students moving to Australia indicates a 7% increase. When compared to the pre-pandemic peak, this rate is only 6% below the standard enrollments before the market went into a standby mode. 

When we bifurcate this market based on cities in Australia, Melbourne contributes to a major share of pushing the PBSA Australia market. With a total share of 36%, PBSA in Melbourne supports the Australian student housing market by reflecting its significant number of university students, especially those from abroad. Followed by Sydney, the expected new PBSA rooms are anticipated to be contributed to the city by 2026. Further details supporting this are the University of New South Wales' collaboration with Iglu for 1,066 apartments and Wee Hur’s contribution of 411 beds tailored specifically for the University of Sydney and UTS. 

Based on past surveys and records, many investors have shown their interest in the PBSA Australia sector, which is evidenced in their purchase of pre-existing assets, property management platforms, and portfolios in Australia student housing market. Despite the rising finance cost, the PBSA market in Australia has shown substantial rent growth and a higher rate of occupancy on a global scale. 

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“In the US and UK, yields have risen by about 30 basis points since mid-2022 lows. In Australia, capitalization rates are expected to surpass comparable build-to-rent products by 50-75 basis points as transaction activity picks up.”

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Being a developing landscape, PBSA Australia has a strong potential given its strong basics, like a higher percentage of growth in rental incomes. This, along with the market’s robust fundamentals, has assisted its growth and presented a strong opportunity for investment. 

One of the most beneficial features of PBSAs is that even if the investment in properties slows down, the PBSA sector still tends to do well due to its counter-cyclical nature. This feature makes it a popular choice among investors as it isn’t directly impacted by inflation. Multiple types of research have shown that people still prioritise spending on education and accommodation despite a higher cost of living. To establish an equilibrium between the demand and supply of Australia student housing, the PBSA sector emerges as a ray of hope. 

As 2023 has almost come to an end, the number of international students in Australia is expected to go up, creating a higher opportunity for investment and exponential growth in this sector.

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