This article is from the Australian Property Journal archive
AUSTRALIA’S student accommodation sector will benefit from the strict and early control measures enforced by the government, with safety shaping as a major drawcard for potential international students as other countries face the challenges of flattening the curve and keeping the spread of covid-19 under control.
International education was worth $40.4 billion each year to the Australian economy as of March, and Australia’s purpose built student accommodation sector (PBSA) had enjoyed 10 years of sustained development and growth, but like most real estate sectors the arrival of COVID-19 dented occupier demand as travel restrictions halted the movement of international students.
Paul Savitz, director, student accommodation at Savills said the early and effective shutdown of Australia’s borders in mid to late March, and the repatriation of citizens back to home countries triggered a decline in physical occupancy across most student accommodation facilities, irrespective of city, with operators reporting falls of between 20% to 50%.
This corresponded with Australian Bureau of Statistics data reporting a 25% decline in international student arrivals in the March quarter compared to the same period in 2019.
Conal Newland, director, student accommodation at Savills said student enrolments (occupier demand), both domestic and internationally mobile, generally rise in extreme economic situations, as people look to up-skill or retrain to remain competitive in a shrinking labour market, or even delay entering the labour market.
Australians searching for domestic courses is up 34% on a five weekly average compared to the same period during April and May 2019.
“A growing domestic cohort, coupled with the reopening of internal state borders and the freedom of internal movement could see a possible shift in PBSA bed demand towards domestic students, providing a timely boost to the sector,” Newland said.
Meanwhile, a recent survey by marketing analysts IDP Connect found that internationally mobile students rated the low risk of infection in Australia ahead of the more generous welfare arrangements available elsewhere.
“With competitor nations facing their own pandemics, and struggles relating to the higher education sector, Australia will benefit from the strict, yet early, control of COVID-19,” Newland said.
Australian’s student accommodation market had begun to reach a point of early maturity, Newland said, as liquidity started to flow and new generation PBSA opening. Savitz, said the sector remains strong due to the further depreciation of the Australian dollar to 18-year lows, internationally recognised and high-ranking universities, relative student accommodation undersupply and strong demand drivers and long-term investment fundamentals.
“This was reinforced by the recent completion of the Urbanest Portfolio to Scape for a price in excess of $2.1 billion, reflecting a new low in terms of net initial yields for the sector,” he said.
The federal government’s 8th May announcement opened the door for chartered flights being allowed to enter Australia to facilitate international students returning to studies on-shore in semester two, or by the start of 2021 academic year.
Students are permitted to gather in groups of 10 in the first phase, rising to 20 in stage two and 100 in stage three, pencilled in for July.
