Strong growth across South Australia’s international student sector is continuing to attract significant inbound investment in purpose-built student accommodation in the city.
A notable number of major transactions have taken place in the last few years that are now at various stages of the development cycle.
This is consistent with national trends whereby Australia has maintained its standing in the international marketplace as a leading global study destination. This has driven a sustained level of growth in enrolments which in turn has resulted in a major flight of investment into strategically located property assets for development as student housing, supporting education infrastructure and amenity. The investment has largely been made by specialist accommodation developers and managers that operate globally and recognise the high yield from these assets in Australia.
The 2018 Savills Australian Student Accommodation Report revealed the student accommodation supply in all Australian capital cities, with the exception of Canberra, is less than 12 per cent of the full-time student population. Globally, investors and fund managers are viewing student accommodation assets as highly valuable due to the rise in mobility in the international student market.
There has been an increased interest in this sector in the Adelaide market as investors have clearly identified that the cost, availability, quality and location of assets in the city represent value with high growth potential that are not easily accessible in the eastern seaboard capital cities and regional centres. With all the major universities and educational institutions based in close proximity, the development of housing options in the city builds on Adelaide’s existing strengths as a quality, affordable, liveable and safe study destination.
The international education sector is now the second largest driver of South Australia’s economy, after wine exports, and experienced a 7.9 per cent increase over the past six years. Nearly 36,000 international students enrolled in Adelaide universities in 2017, contributing $1.54 billion to the local economy.
The city is the residential location of choice for students who seek close-proximity to core educational institutions combined with a vibrant lifestyle. Students currently make up nearly 25 per cent of the city’s permanent residents, with student resident numbers in the city expected to grow a further 3,000 by 2021.
The last year has seen the completion of three developments with a combined value exceeding $200 million. Among them are urbanest at University of Adelaide on North Terrace and Atira Student Living on Waymouth Street. The two developments deliver a high-quality offering in premium locations and an additional 950 beds to the current market. These are currently operating successfully and are already experiencing high occupancy levels. Dwell Student Living, a major investment by Singapore-based Centurion Corporation, is situated in the city’s picturesque East End and has also now been completed. It will commence operations in early 2019, adding a further 280 beds.
Image: Urbanest on North Terrace, courtesy of Urbanest Student Accommodation
Four major development projects are forecast for completion between 2019-2021, accumulatively adding an increase in supply of nearly 3,000 beds. Two of these are major investments by Singaporean-based Wee Hur Holdings, with a value in excess of $140 million that account for 1,500 new beds into the market. The first of these projects at 89-109 Gray Street will be completed in 2019. The second project at 124 Waymouth Street will commence construction in early 2019.
Hines Property, a major local property investment and development group, also recently secured approval for what is planned to be the tallest student accommodation building in the world. This development is strategically located close to Adelaide’s premier shopping precinct Rundle Mall and the major universities on North Terrace. The estimated value is $85 million and will deliver 510 beds across a 28-storey tower. It is scheduled to commence soon and be completed by 2021.
Global Student Accommodation (GSA), the world’s largest operator of managed student housing, has also made a major investment in Adelaide. The strategically located site at 266 North Terrace is directly opposite Adelaide University and the University of South Australia’s City East Campus. Development approval has been granted and preparatory site works have been undertaken with construction expected to commence in early 2019. The investment in this development is estimated to be in the order of $90 million value and will bring up to 700 beds into the market. The significant landmark building is expected to encompass high-end design and amenities in a premium location boasting spectacular views.
The net effect of these developments will support the commitment of major education providers to continued expansion as well as fuel economic growth, vibrancy in the city, and further cement Adelaide’s reputation as a preferred study destination and investment location.