More high-quality student accommodation makes sense despite uncertain policy landscape

Building more high-quality student accommodation makes sense despite policy uncertainty

The Australian rental crisis is real, but international students are not to blame

• Australia is facing a severe and worsening rental crisis
• Despite popular opinion, international students are not a key driver of this problem

The international student market is undergoing significant policy change

• The Government has introduced a suite of legislative changes directly impacting international student numbers
• This includes a proposed cap on international student numbers
• Cap or no cap, damage to international student numbers is already done

New high quality PBSA makes sense regardless of policy settings

• Government has demonstrated ongoing support for Purpose-Built Student Accommodation (PBSA)
• Additionally, there is a severe undersupply of PBSA for existing students
• Great PBSA enhances student development, wellbeing and outcomes
• Models are emerging to support growth, but non-city and regionals are finding it harder to invest
• Government, universities and developers must work collaboratively to meet PBSA needs

Australia is a global powerhouse of higher education

International higher education student enrolments recovered rapidly to pre-covid levels in 2023 and contributed ~$48bn to the Australian economy.

Great PBSA enhances student development, wellbeing and outcomes

The University Accord signals an increasing importance of accommodating students and supporting them to succeed

The Federal Government has flagged legislative changes which could impact international student visa numbers from 2025-2026

The Government is seeking to reduce low quality enrolments and alleviate the pressure on the rental market.

Australia IS facing a severe and worsening rental crisis

Rents have shot up in recent years as vacancy rates have decreased to historical lows

International students are not driving the rental crisis

In recent years the Australian Government has introduced a suite of legislative changes directly impacting international student numbers

Cap or no cap, the damage is already done

Regardless of whether the Bill passes or not, the sector is already feeling the effects of more stringent visa policies – and the impact is spread unevenly across providers.

New high quality PBSA makes sense regardless of policy settings

Many universities exhibited financial weakness, even prior to COVID-19

Combinations of high leverage and negative underlying operating margins indicate high levels of stress in the tertiary sector. I’m not convinced that Universities alone will be able to make the student accommodation investments required to meet demand.

Developers must continue to offer attractive PBSA investment models to universities

Government should be playing an enabling role to ensure Universities can meet student needs and provide supporting, cost effective PBSA

Appendix – relevant recent insights

Draft changes could produce a range of outcomes for international student enrolments, but a decline is considered unlikely