Housing for foreign students: demand surpasses supply

Housing for foreign students: demand surpasses supply


August 2018
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Housing for foreign students: demand surpasses supply

The number of overseas students studying in Australian universities has surged over the past few years, calling for an increase in quality student housing options.

In Sydney universities alone, over the ten years from 2005 to 2015, the number of foreign students increased by 13,784. In the following two years, from 2015 to 2017, the increase jumped by 20,745.

A recent student housing report published by Knight Frank revealed that almost 20% of Australian universities’ operating revenue is derived from international student fees and in some instances, is as high as 30%.

The report also demonstrates that while there were 337,117 full time Higher Education international students in the 2016 academic year, there were only 93,890 purpose built student accommodation (PBSA) bed-spaces at the end of 2017. This equates to a theoretical international student to bed ratio of 3.6:1.

These figures show the strong demand for quality and affordable student housing and as such Knight Frank are predicting a second wave of investors looking to capitalise on this growing development sector.

8,290 new PBSA beds are set to made available nationally this year – an increase of 20% from last year. Despite this increase, demand is still superseding supply and Knight Frank expects this trend to continue.

 

Where’s the demand coming from?

The demand is flourishing in both local and international forms; Chinese students however, constitute the largest single category.

"There has been speculation of late that because Chinese global university rankings are improving, that this may have negative consequences for Australian universities, given their part reliance on full-fee paying international students," says Knight Frank research director Paul Savitz.

"However, when students are looking to study abroad, research shows that lifestyle factors are equally as important as the quality of education.

"Because Australia offers international students a fantastic lifestyle with excellent employment opportunities, we have every confidence international student numbers will continue to rise."

Many universities are diversifying their intakes however and big rises of students from Brazil and Colombia have also been noted.

 

Why the increase?

It has been reported that some universities were making huge profits out of the international student market.

"Because the Government has effectively capped the number of domestic students, international students are becoming an increasing percentage of all students," Grattan Institute higher education program director, Andrew Norton, has said,

"A lot of that revenue to universities is being invested in buildings and in research activities."

 

Benefits for greater Australia

Universities Australia's chief executive, Belinda Robinson, believes the demand stems from the quality of education being offered to foreign students.

"We have almost doubled enrolments over the past decade and built international education into Australia's third-largest export sector," Ms Robinson said.

"This supports Australian communities, jobs, regional economies and our relationships in the world.

"These half a million international students will become tomorrow's global leaders, returning home as informal ambassadors for Australia and extending our nation's worldwide networks in business, diplomacy and politics."

With concentrations of international students at Australia’s larger ‘Group of Eight’ (Go8) universities this means for student accommodation is required in the inner-city areas of the nation’s capitals.

Knight Frank sees the availability of this prized inner-city land as a significant barrier-to-entry for new investors, however this will only deter a few.

With a ‘second wave’ of investors expected to enter the student housing market, Knight Frank anticipate “Australian Superannuation funds (likely) to become interested, alongside other global investment funds. It is also anticipated that there will be a blending of the PBSA and Build-to-Rent / Multi-housing sectors with groups targeting a longer life cycle of their occupants”

 

*NOTE: This article is not a definitive assessment as to the overall state of the market, but should serve as a guide to highlight how respective sectors of the property market are dealing with change.

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