Australia is now firmly entrenched as the third most popular global destination for international students studying abroad, as the international student population continues to increase in both universities and other education sectors.
According to the latest research from Savills Australian Student Accommodation Market Report, Australia has a strong reliance on international students from a number of south-east Asian countries. The latest demographic information available indicated that international student growth is stronger as evidenced by enrolments in higher education courses with student visas growing by 11% from 2015 to 2016.
China (28%), India (11%), Republic of Korea (4%), Thailand (4%) and Vietnam (4%) are the top five countries of origin for international students studying in Australia. In 2016, the strongest growth in international student numbers in Australia came from Brazil (20%), Malaysia (18%), Nepal (16%), Hong Kong (10%) and Colombia (22%).
Universities across Australia continued to be significant participants within the market, with 71,645 beds of purpose built student accommodation (PBSA) in the eight Australian capital cities. The existing supply in each city was less than 11% of the full-time student population with the exception of Canberra (28%).
Savills Australia director of student accommodation Conal Newland said Australia’s student population is continuing to grow at a steady rate, with the latest data indicating that total student enrolments grew by 2.7% from 2014 to 2015, an increase of 36,903 students.
“New South Wales, Victoria and Queensland have the greatest number of student enrolments with Victoria achieving the largest increase in enrolment numbers year on year, with an increase of 4.4% compared to 2014.
"Of all the states, Tasmania saw the largest increase of 9.9% growth in 2015 with multi-state higher education providers increasing by 6.7%.
“The number of international students enrolled in Higher Education courses and utilising study visas in Australia has grown by 10.9% from 2015 to 2016, a marginally higher increase than the year previous,” Newland said.
There were 554,179 international students studying on a student visa in Australia in 2016 which represented an 11.3% increase over 2015 figures (498,155 student visas). The top five nationalities were China, India, Republic of Korea, Thailand and Vietnam.
China was the largest international student country of origin which contributed over 27% of the total number of international students in Australia in 2016.
The country with the highest percentage of growth was Columbia, with growth rate of 22.4% from 2015 to 2016.
was recorded as the most attractive Australian market for investment into the student accommodation sector. The total development pipeline in Sydney increased from 3,665 beds in 2016 to 5,435 beds in 2017.
According to Savills, the pipeline for delivery of new student accommodation in Melbourne increased significantly in the last 12 months with a total pipeline of 16,295 beds in 2017, compared to the 9,651 beds in 2016.
PBSA development pipeline activity slowed in the first three quarters of 2017. There was a minor acceleration towards 30 June 2017 when Brisbane City Council’s infrastructure levy reductions ceased, and Savills said these projects must commence construction by the end of October 2017 to receive the concession. Analysis indicated that the total combined PBSA pipeline has increased from 8,930 beds in 2016 to 10,682 in 2017.
The development pipeline in Adelaide has grown to 2,159 in 2017 from 1,480 in 2016. In 2018, three projects are programmed for delivery including developments by Blue Sky, Kyren Group and Urbanest. In 2019 a further 380 beds are programmed for delivery.
There was significant interest in the Perth student accommodation market in the last 12 months, with a total development pipeline increase to 3,621 beds from 2,000 in early 2016.
“The US and Western Europe continued to break records in 2016, with the UK having a slower year transaction wise, before being projected to reach close to 2015 levels in 2017," Savills Australia Associate Director of Student Accommodation Rachel Coates said.
“Analysis of recent transactional activity within the UK demonstrates how the Australian transaction market is still at an early stage, both in terms of the volume of stock that has been traded analysed in terms of the number of beds, and the total value of transactions.
"There is a substantial amount of trading in the UK forecast for the fourth quarter of 2017, indicating that transaction volumes could total close to £5 billion for the year.”
Coates said political reform of the Australian Higher Education Sector remains on the agenda, as continued government funding of the Australian University Sector seems less likely, and competition between universities is set to increase.
“Sydney will continue to be the most attractive, but the most difficult market to access. Despite a rapid rise in the number of projects over the last 12 months, Melbourne continues to attract a number of new pipeline projects” she said.
Debt funding for new development led projects has affected a number of property asset classes through the first three quarters of 2017, including student accommodation. Accessing debt finance for new projects is anticipated to remain challenging.
“Looking to the start of 2018, the delivery of new pipeline accommodation, particularly in Melbourne and Brisbane is going to be closely watched by market participants and observers in terms of the occupancy uptake and stabilisation of new assets, particularly towards the top end of the rental price range. And accessing debt finance for new projects is anticipated to remain challenging."