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Growing Need in Student Lodging Triggers Financial Investment Interest in Australia – Image Credit Unsplash
- Australia needs 180,000 additional Purpose-Built Trainee Lodging (PBSA) beds to meet the demand from university tenants.
- The sector is attracting investment due to strong rental growth and resistant tenancy rates, specifically in significant cities like Sydney and Melbourne.
Australia’s hotel and travel market is experiencing a surge in demand for Purpose-Built Trainee Lodging (PBSA), with a significant deficiency of 180,000 beds needed to accommodate trainees going to the nation’s leading universities. This space provides a rewarding opportunity for financiers and designers, particularly in significant cities such as Sydney and Melbourne.
According to a brand-new report by CBRE, the demand for PBSA is most pronounced in Sydney, where the existing supply disappoints student requirements. The report highlights that just 6% of students can discover lodging on or near university campuses, highlighting the immediate requirement for growth.
Bed Supply Shortfall Throughout Sub Markets
CBRE’s Sameer Chopra stressed the potential for growth in the sector, noting that the existing pipeline of 28,000 brand-new PBSA beds by 2028 is insufficient to fulfill the blossoming need. In Melbourne’s CBD and inner north alone, there is an estimated unmet need of 10,000 beds, while central and inner-west Sydney need an additional 25,000 beds.
The investment landscape is promising, with typical leas for PBSA studios in Melbourne and Sydney revealing a compound yearly development rate of 5.5% from 2018 to 2024. Andrew Purdon of CBRE highlighted the sector’s strength, noting steady tenancy rates and rental development even post-COVID, which continue to attract both domestic and global financiers.
As interest rates potentially reduce, the PBSA sector is poised for further investment, with capital actively seeking completed properties in core education markets. Nevertheless, the minimal availability of such properties is driving both new and recognized gamers to check out advancement opportunities, signifying continued growth and growth in Australia’s student accommodation sector.