This article is from the Australian Property Journal archive
WITH less than a 1% vacancy rate, Australia’s overheated rental and student accommodation markets will need to accommodate up to 40,000 Chinese university students in the coming weeks, after a snap order by Beijing for students to return to face-to-face learning or not have their qualifications recognised.
An announcement from the Chinese Ministry for Education, which said that “Diplomas and degree certificates awarded in the spring semester of 2023 (autumn semester in the southern hemisphere) and beyond using cross-border online learning…will not be accredited” means tens of thousands of students are now scrambling to book flights, obtain visas and find accommodation in Australia.
The international student sector was worth $40 billion to Australia in 2019 – it was the country’s biggest service export – before COVID saw a mass exodus of students back to their home countries, where many remained as online learning quickly became the norm. China comfortably accounts for the most international students, and an estimated 40,000 are currently in China.
The exodus was a major driver of the emptying of CBDs throughout the COVID period, alongside stay-at-home orders that saw office workers also switch to online operations. Restrictions have eased and international borders have reopened, but cities continue to see low office occupancy rates, and international students have not returned in full numbers – although Beijing’s edict will shake that up.
While the return of Chinese students will be a welcome move for many of the CBD businesses who had to contend with a loss of trade and staff shortages during the extended lockdown periods, the rush could also present a logistical nightmare.
Furthermore it is expected to put more pressure on the private rental property market with the national vacancy rate across Australia at just 1%, according to SQM Research, and the Sydney and Melbourne CBDs have declined to just 3.2% and 2.5% respectively.
Photo by Eric Prouzet on Unsplash
Meanwhile, a report released late last year by the Student Accommodation Council – an arm of the Property Council of Australia – showed many Australian cities were already at capacity for purpose-built student accommodation beds, with Brisbane, Perth and Adelaide expecting zero vacancy rates in 2023, well before Beijing’s announcement.
“With students scrambling to return earlier than expected, we will see student accommodation full in many markets – which will put pressure on already tight rental markets as students look elsewhere for places to live,” said executive director of the Student Accommodation Council, Torie Brown. Chinese students make up 27% of the sector’s residents.
Savills data shows the supply pipeline for purpose-built student accommodation beds is muted for the next two years – with 100% of the new beds coming online in 2024 located in Sydney and Melbourne.
Savills’ prediction of international students returning to the pre-covid peak has accelerated thanks to the Chinese government’s decision.
There are currently 79,100 PBSA beds available in Australia, with a further 4,937 added in 2022.
Beijing’s decision is also expected to boost capital markets demand for new student accommodation projects, which Conal Newland, head of operational capital markets at Savills, said had declined as a result of investor concerns about demand during the pandemic and the ability for the market to return to pre-pandemic levels.
“Governments at all levels need to prioritise the development of new student accommodation because it provides appropriate housing exclusively for students and stops them competing with mums and dads in the rental market,” Brown said.
“Expedited planning approvals, removing taxes like foreign investor fees and planning systems that prioritise student accommodation close to places of study should all be a top priority for policy makers.”
Photo by John McArthur on Unsplash
Universities Australia chief executive, Catriona Jackson, said China’s decision “will encourage students to return to Australia which is a good thing”.
“Happening so close to the new academic year, there are obvious logistical issues that need to be worked through to ensure the smooth return of around 40,000 Chinese students who remain outside of Australia,” she said.
“Education is our largest services export and generated more than $40 billion in 2019 while boosting Australia’s social fabric. Working back to this position of strength we held prior to the pandemic is in the interest of universities and our nation.”
