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JLL Australian Student Accommodation Market Update 2015
JLL Australian Student Accommodation Market Update 2015
June 2015
JLLs second student accommodation market update provides
an overview of Purpose Built Student Accommodation (PBSA) in
Australia. Over the last 12 months there has been a significant
increase in awareness of this emerging asset class. Whilst the
appetite for institutional investment is growing, there are at present
few opportunities to enter the market. There have been limited
transactions as the main developers are focusing on developing and
then holding the finished assets.
2 -2 1 0 4 -1 -5 4
Source: The QS World Rankings 2013 2014 and 2014 2015
1 3 12 -2 8 5 11
Source: The Times World University Rankings 2013 2014 and The Times World University Rankings 2014 2015
1 Australian Government Department of Education International Student Data (April 2015) International Student Survey 2014 Overview report.
2 QS World University rankings 2014/2015.
3 QS Best Student Cities 2015.
Table 3: Mercers 2013 and 2014 Cost of Living Rankings for Major Australian Cities
Ranking 2013 Ranking 2014
60 59
50 52 53
40
37 34
30 33
26 28 27
20
16 18
10
1 9
4 & 5 Australian Government Department of Education and Training International Student Survey 2014 Overview Report.
6 Mercers 2014 Cost of Living City Rankings (July 2014).
4 | JLL
Student Demographics
Total student numbers in Australia over the last 12 months have Many of Australias main universities are located in major metropolitan
shown modest growth. Based on the latest Department of Education areas in and around Central Business Districts (CBDs). Three-
and Training data as of 2013 (most recent data available) there were quarters (981,427) of students study in the three Eastern states (New
a total of 1,313,776 full and part-time, domestic and international South Wales, Victoria or Queensland) with Australias three largest
students in Australia who were enrolled at a Higher Education Provider cities (Sydney, Melbourne and Brisbane). The table below shows
(HEP). This number represents an increase of 4.4% from 2012 with the breakdown of domestic and international students by State and
70% (924,845) studying full time, while 30% (388,931) were part time. Territory (Table 5).
(Table 4).
Domestic International
7 Australian Government Department of Education and Training (uCube) which is based on the student and staff data collections (2013).
250,000
200,000
150,000
100,000
50,000
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012
2013
2014
2011
0
Source: Australian Government Department of Education and Training
International student enrolments in Australia 1994-2014.
Schools Non-award
* The total is less than the sum of its components as individual students can undertake study in more than one sector during the year.
Source: Australian Government Department of Education Research Snapshot (March 2015) International student numbers 2014.
8 Australian Government Department of Education International Student Data (March 2015) International Student Enrolment Data 2015.
6 | JLL
In 2014 Australias international students were from 191 different Despite providing over one quarter of international students in
countries. The largest source of international students studying in Australia, the growth in Chinese students was only 1.8% between
Australia are from the Asia Pacific region. The top five nationalities 2013 and 2014. This is substantially lower than many of the other top
of international students studying in Australia, are China (26.75%), 10 source countries. Based on the data in the following table, the five
India (10.23%), Vietnam (4.85%), Republic of Korea (4.45%) and countries with the strongest growth in international student numbers in
Malaysia (4.23%). The top ten countries together contributed 65.7% 2014 are India (28.09%), Nepal (19.73%), Pakistan (18.75%), Brazil
of total international student numbers. Nine of the top ten nationalities (18.49%) and Thailand (15.18%). Pakistans growth in the last year
recorded more than 13,000 students studying onshore in Australia9 resulted in the country entering the top 10 source countries, replacing
(Table 7). the USA (Table 8).
Table 7: Top 10 countries providing International Student Numbers in Australia in 2014 155,376
34.26%
121,318
Total Number of Total 26.75%
Students 2014 Percentage Other
Nationalities
453,532 100% China
46,380
10.23%
19,201 20,178 21,987
10,790 13,491 13,726 14,970 16,115
3.30% 3.55% 4.23% 4.45% 4.85%
2.38% 2.97% 3.03%
India
*International student numbers relate only to international students in Australia on a student visa and are derived from AEI enrolments data.
Source: Australian Government Department of Education Research Snapshot (March 2015) International student numbers 2014.
Table 8: International Student Numbers in Australia Growth between 2013 and 2014 36,208
46,380
28.09%
Total Number of Total Number of Total Growth 11,268
Students 2013 Students 2014 2013-2014 12,634 9,086
10,790 13,491
10.37%
14,970 India
410,925 453,532 136,093
155,376
13,991
16,115 18.49% 18.75% 19.73%
20,078
14.17% 15.18%
21,987 Nepal
Brazil Pakistan
13,319
9.51%
119,237 18,855 Thailand
13,726 Other
20,156 121,318 19,201 Nationalities
20,178 3.06%
1.75% 1.84% Vietnam
0.11%
China Indonesia
Malaysia
Republic
of Korea
*International student numbers relate only to international students in Australia on a student visa and are derived from AEI enrolments data.
Source: Australian Government Department of Education Research Snapshot (March 2015) International student numbers 2014.
9 Australian Government Department of Education Research Snapshot (November 2014) Export income to Australia from international education activity in 2013-14.
Figure 2: Export Income from Australian Educational Services Figure 3: Australias Top 10 Goods and Services Exports 2013
2008 - 2014
16 60 Coal
Education
15.5 50
2009-2010
-related
travel services
2013-2014
2010-2011
14.5 40
2008-2009
Personal travel
2011-2012
gas services
14 30 Aluminun ores
Crude and conc
Gold petroleum (incl alumina)
13.5 20
Beef
Wheat f.c.f.
Source: Australian Government Department of Education and Training 10
(November 2014) Export income to Australia from international education
activity in 2013 - 2014
0
Notes: Goods trade are on a recorded trade basis, Services trade are on a
balance of payments basis. Total is balance of payments basis.
Source: http://dfat.gov.au/trade/resources/trade-at-a-glance/Pages/top-goods-
services.aspx
10 Australian Government Department of Education Research Snapshot (November 2014) Export income to Australia from international education activity in 2013-14.
8 | JLL
Existing Supply of Accommodation
JLLs analysis of the existing supply of accommodation considers the
six main Higher Education cities across Australia (Sydney, Melbourne,
Brisbane, Adelaide, Canberra and Perth). In Sydney, Melbourne
and Brisbane the analysis focuses on the supply of accommodation
provided in the Greater Capital City Statistical Areas (as defined by the
ABS). In addition to these bedrooms, there is an existing and growing
supply of PBSA in other localities. JLL research indicates that in 2015
there are 58,109 beds of PBSA in the top six localities representing
an increase of 4,647 beds (8.7%) in the last 12 months. We consider
that this increase in supply is both through the development of new
accommodation and adjustments to our survey methodology (Table 9).
10 | JLL
Pipeline
The following table indicates that even if all of the pipeline
accommodation is delivered in Sydney, Melbourne and Brisbane, the
total supply will be 10.26%, 9.08% and 13.55% of existing full-time
students respectively. Overall provision at these levels compares
favourably on an international basis to the more mature market of
London which currently has 27% PBSA provision. This analysis also
does not take into account that student numbers in Australia are
growing and are expected to continue to do so during delivery of the
pipeline accommodation (Table 10).
Total Number of
International Students 49,124 92,167 33,424
(2014)
Pipeline Supply 4,954 6,856 8,661 An additional analysis based on the UCA calculation of mobile Higher
Education Students which includes international, domestic interstate
Existing Gap 34,315 76,179 23,970 and domestic intrastate students based on 2013 student numbers
indicates more headroom in each of the major cities (Table 12).
Potential Gap if all
Pipeline Delivered 29,361 69,323 15,309
Table 12: UCA Mobile Students - Headroom Supply Analysis
Source: Australian Government Department of Education and Training
(uCube), JLL Student Accommodation Database 2015.
Total Number of
Mobile Students 95,618 96,174 60,032
(2013)
12 | JLL
Sydney Development Pipeline
Sydney City attracts the most interest from student
accommodation developers and investors drawn by an acute
shortage of high quality student accommodation and global
recognition as an attractive location to study and live. Overall
Sydneys development pipeline has fallen from 5,241 in 2014
to 4,954 beds in 2015 mainly attributed to the completion of
Urbanest Central on Wattle Street and Frasers Kensington Street
(UniLodge @ Central). A large number of beds are scheduled for
completion in Semester Two 2015. The pipeline forecast beyond
2016 is significantly lower and reflects the feasibility of student
accommodation development against other competing asset
classes such as residential.
We note that the Pre-Lodgement / Speculative dataset excludes Figure 4: Sydney Projected Development Pipeline
publically stated strategies for the delivery of new accommodation
Number of Beds
from universities. This excludes 4,500 new beds planned to be
2,500
delivered by the University of Sydney over the next five years,
2015
but includes 1,500 beds which are currently planned for or under
2,000
construction in College extensions, the redevelopment of the Queen
Mary Building and the new Business School (Table 13). 1,500 2017
There are a total of 4,954 beds in the Sydney pipeline. As detailed in 2019+
1,000
the following chart, these are forecast to be delivered over the next
five plus years. In the second Semester of 2015 several properties are
500
due for completion including Urbanest Darlington, Frasers The Steps 2018
2016
and two projects from the University of Sydney, the Queen Mary
0
Building and the Business School accommodation (Figure 4).
Pre-Lodgement / DA Submitted DA Approved / Under
Speculative Construction
Table 13: Sydney Development Pipeline by Stage
Source: JLL Student Accommodation Database 2015.
Percentage of
Number of Beds Total Pipeline
Pre-Lodgement /
If all of the 4,954 beds above are completed, this represents 4.4% of
Speculative
1,190 24% additional current full-time student numbers who will be able to access
University or commercially provided PBSA, leaving 172,852 (88%) full
time students who will rent from the private residential sector or live at
DA Submitted 427 9% home.
DA Approved /
Under Construction
3,337 67%
We note that the above analysis excludes publically stated strategies Should all of the 6,856 beds above be completed, this represents
for the development of new accommodation by the universities. This 2.7% of additional current full-time student numbers who will be
includes a target of 2,000 beds that the University of Melbourne is able to access University or commercially provided PBSA, leaving
planning to deliver by 2020 (Table 14). 228,650 (90.9%) full time students who will rent private sector rental
accommodation or live at home.
There are a total of 6,856 in the Melbourne pipeline. As detailed in
the following chart over 2,000 are expected to be delivered in 2016.
This accommodation will all be provided by the universities with the Figure 5: Melbourne Projected Development Pipeline
University of Melbourne (in partnership with Campus Living Villages),
Number of Beds
Monash University and RMIT programmed to finish projects currently
2,500
under construction (Figure 5).
2019+
2016 2018
2,000
Pre-Lodgement / 500
Speculative
3,681 54%
2015
0
14 | JLL
Brisbane Development Pipeline
Strong supply and demand, availability of land and support from
local government have all contributed to Brisbanes surge in
student accommodation activity in the last 12 months. However,
75% of the current pipeline is speculative. Previously the City has
had a fragmented supply and limited high quality accommodation.
If completed, the new wave of development will establish the CBD
and South Bank as two student accommodation destinations and
ithis is expected to consolidate student focused amenities in these
areas.
Table 15: Brisbane Development Pipeline by Stage Figure 6: Brisbane Projected Development Pipeline
Table 16: The Top 10 Private Sector Student Accommodation Providers in Australia 2015
Student
Housing 46 2,650 2,650 0 0 0 2,650
Australia
Living +
Learning 10 1,906 1,906 1,906 0 0 1,906
Partners
Total number of Total number of Total number of Total number Total number of Total number of Total number of
buildings either beds either owned operational beds of operational beds beds with buildings with operational beds
owned or under or under under wholly owned in Development Development and number of
management in management in management in Australia as at Approval or under Approval or under beds in the
Australia as at Australia as at Australia as at February 2015 construction in construction in Development
February 2015 February 2015 February 2015 Australia as at Australia as at Pipeline as at
February 2015 February 2015 February 2015
Total
16 | JLL
Market Activity
The off-campus Australian student accommodation market is
transforming from a fragmented sector with high levels of strata
ownership to an institutional asset class. A number of global investors
have entered the market in the last five years and in 2015 there have
been three new large scale entrants. Many of the major developer /
operators in the market are now looking to grow portfolios. As such,
there have been limited transactions of existing off-campus assets in
the last twelve months.
11 http://www.illawarramercury.com.au/story/2714031/private-investors-to-fund-uow-student-housing/
12 http://eplan.brisbane.qld.gov.au/?doc=HostelCode
18 | JLL
Outlook
Without change in macro drivers, in the short to medium term new Over the next 12 months student accommodation will continue to
student accommodation development will remain challenging in attract increased levels of interest. JLL anticipates:
major Australian metropolitan areas. However, given the structural
undersupply of good quality accommodation across many locations in At least one more new significant developer / operator will enter the
Australia further development of new high quality accommodation is a sector in 2015.
necessity to support the aspirations of universities and stakeholders in T
he volume of studios entering the Sydney market may impact on
promoting Australian Higher Education in the global market. rents and occupancy levels for this type of accommodation.
Noral Wild
National Director
Head of Social Infrastructure Australia
noral.wild@ap.jll.com
+61 3 9672 6522
Follow us
www.jll.com.au