Student Accommodation May Be Oversupplied

“The number of international students in Australia increased from 93,000 in 1994, to 345,000 in 2005, at an average compound growth rate of 12 per cent per annum,” said Sarah Emmerton, property analyst with Charter Keck Cramer. Of that share, 51,000 international students are undertaking their studies in Victoria.

Analysts say Australia is attractive to international students because it is English speaking, in the same time zone as Asia, and relatively affordable compared to studying and living in the UK and USA. Well recognised universities as well as geo-political stability have also made Australia an attractive place to study, according to Ms Emmerton.

However, Australia is not the only country competing for the lucrative international student market, says Charter Keck Cramer.

Australia’s global competitive advantage in attracting international students will come under increasing pressure in the medium term, warns Ms Emmerton. “Already, more universities in Asia are offering courses taught in English, and a global marketing campaign has been flagged to promote a united European university network as a destination for international studies.”

“The recent very strong growth in international students is clearly slowing,” said Ms Emmerton who said that the high levels of new supply added to the market in the last five years was not sustainable. “Demand will be underpinned by funding reforms requiring universities to attract more fee paying (international) students.”

This is expected to put pressure on existing student accommodation facilities, according to analysts and developers, who add that well located, larger and high quality apartments will outperform the rest of the market moving forward.

“Location is the key to the success of these projects,” said Mark Feiglin, director of the South Pacific Property Group, which develops student accommodation facilities in Victoria.

South Pacific recently launched the $20 million 100-unit iQ apartment project in Berkeley Street Carlton. He said his company had identified a niche at the top end of the student market, and the project particularly targeted South East Asian students.

Melbourne-based builder, Piccolo Developments is also targeting this end of the market, employing architect Rothelowman to develop the 118-unit D2 project in Orr Street Carlton. Each apartment in D2 includes a balcony, as well as slimline television, DVD player and European appliances.

Charter Keck Cramer says there are currently 1900 self-contained student apartments in the CBD, and 2300 apartments in the inner northern suburbs. A further 600 apartments are in metropolitan Melbourne with the highest concentration being near Swinburne in Hawthorn and Monash in Clayton and Malvern East.

The next wave of student accommodation development is expected to be outside of the traditional CBD and inner northern suburb grid, with almost half of the 1200 apartments under construction in metropolitan areas, said Ms Emmerton.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.