This article is from the Australian Property Journal archive
SINGAPORE's Centurion Corporation Limited has entered the student accommodation market in Melbourne with the purchase of the RMIT Village and adjoining car park for $60 million.
Located at 5-17 Flemington Rd North Melbourne, on the northern edge of the CBD, the property comprises 229 apartments and a current capacity of approximately 456 beds, with facilities including a swimming pool, cafe, study centre and gymnasium – on a 4,000 sqm site.
The company has paid $52 million for the student accommodation and $8 million for the adjoining car park building.
The property has an arrangement whereby the university may reserve beds for its students prior to the commencement of each academic year. Typically, RMIT University reservations account for 70% of the total occupied beds annually. Occupancy at RMIT Village has been close to 100% in the past three years.
The village is managed by Campus Living Village, one of the largest student accommodation operators in the world which owns, manages or is developing over 35,000 beds for around 50 institutions in Australia, New Zealand, the United Kingdom and the United States. This arrangement will continue after the acquisition by Centurion.
Centurion Corporate CEO Kong Chee Min said the existing student accommodation presents asset enhancement opportunities to increase its bed capacity in the future because the adjoining car park building may also be redeveloped into new apartment buildings.
“We are excited about this proposed acquisition of RMIT Village in Melbourne as it is an excellent asset to kick-start our student accommodation business. It gives us the opportunity to tap into the Australia education market, which is a key international education gateway. Melbourne, in particular, is an established education centre and was ranked as the world’s fifth best student city in 2013,” he added.
The deal was transacted by Jones Lang LaSalle’s director of student accommodation services Conal Newland and Noral Rich on behalf of Transfield Holdings.
Newland said the strong interest generated by this offering in the market signals growing demand by investors and developers for purpose built student housing in Australia.
“The interest we received in RMIT Village was significant from investors and developers within Australia and offshore looking to enter this emerging sector.
“We estimate there is currently over $1 billion of potential investment looking to enter the Australian student accommodation market to capitalise on the strong fundamentals that currently exist, such as the gap in supply and demand and the yields on offer,” he added.
“Melbourne has a shortage of purpose built accommodation for students. Jones Lang LaSalle estimates that the proportion of students in Melbourne living in purpose built housing is very low at only 7%. There is a significant difference between Melbourne and other global cities like London, which has 21% of students living in purpose built accommodation.
“When you consider that 93% of students in Melbourne are currently residing at home or in private rental accommodation, the potential for growth in student housing is huge.
“The projected pipeline of purpose built student housing that is either under construction or approved in Melbourne is also relatively low, at approximately 1,228 bedrooms, which represents 0.6% of total full time students studying in Melbourne. We estimate there are circa 200,000 full time students studying within the seven main universities located in Melbourne,” Newland said.
Centurion Corporation, formerly known as SM Summit Holdings Limited, owns and operates accommodation assets, as well as a storage disc manufacturing business.
The group currently has a portfolio of 18,186 and 13,520 beds in Singapore and Malaysia respectively. In September last year, it entered the Australian market with the acquisition of land in Port Hedland, Western Australia with the intention to develop accommodation for workers and business executives in the region’s mining industry.
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