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Where students in Sydney live: purpose built accommodation low at only 8% of all housing options, with a further 4% in the development pipeline

Jones Lang LaSalle’s Research shows even with a pipeline of new developments anticipated to provide 6,000 bedrooms of new purpose built student housing, this will not meet the projected increase in demand over the next 3 years

SYDNEY, 7 JUNE 2013 – New Research by Jones Lang LaSalle shows the proportion of students in Sydney living in purpose built student accommodation continues to be low by global standards – at only 8% of all housing options currently, with a further 4% in the development pipeline.

The figures show that 3% of accommodation is direct let by private sector operators, while 5% is provided by Sydney Universities.  But by far the overwhelming majority of accommodation (88%) is classed as at home living or in market rental accommodation.

Jones Lang LaSalle’s Director of Student Accommodation Services, Conal Newland said, “Compare this picture to where students in London live, which is a much more mature market in the provision of purpose built student accommodation, and we find that three times the amount of students there (21%) are living in purpose built accommodation.  A further 7% is in the development pipeline.

“Sydney is catching up with a current pipeline of over 6,000 bedrooms of new purpose built student accommodation, but even this will fail to meet the projected increases in demand as this pipeline completes over the next 3 years.
“Our research indicates that the current pipeline in Sydney includes three projects under construction by specialist developers Urbanest and Iglu which will provide over 1,500 bedrooms.  University of Sydney has also publicised an interest to provide 3,500 additional bedrooms by 2015 and a further 1,000 by 2016/18.
“The Australia – Educating Globally Report released by the Australian Government in February this year says international student numbers in 2012 were recorded at 402,000. The Report estimates that these student numbers could increase in Australia by 117,000 over the 8 year period between 2012-2020.
“The Report doesn’t forecast potential increases in specific localities, but if we extrapolate the figures based on current student population trends, this could translate to an increase of nearly 22,000 students in Sydney over this time period.
“The gap in purpose built accommodation will continue to widen unless more student accommodation projects are promoted, however student accommodation providers are often competing for sites against residential developers who are in a market which is particularly strong at the moment,” said Mr Newland.
The Australia – Educating Globally Report estimates that the most likely growth path for Australia’s international student intake would see Australia hosting around 520,000 students in 2020, studying across all education sectors and contributing around $19.1 billion to the local economy.  The report says this will bring direct benefits to retailers, accommodation providers and community enterprises.
Mr Newland said while ownership of student housing has traditionally been dominated by developer-operators, increasingly equity funds, sovereign wealth funds, pension funds, investment managers and REITs are entering the emerging global market.
“Student accommodation is a growing asset class and there are enormous opportunities in Australia.
With the forecasted increases in student numbers in Australia, there is a clear need for suitable, quality accommodation options to satisfy the growing student demand,” he said.
OECD research indicates global tertiary enrolments have grown 68% in the decade up to 2011 and are forecast to growth a further 59% by 2025.  Australia’s growth has mirrored this between 2002 and 2011, with international enrolments into higher education Australian institutions having almost doubled.
“Australia is well placed to capitalise on these increasing student numbers with research produced by QS indicating four Australian cities were placed in the 25 most popular student destinations in 2012.
“However, Australia will miss out on capturing this growth if there is not the provision of quality purpose-built accommodation for international students studying in Australia. 
“Given its strong fundamentals, the Australian market is attracting significant interest from a range of national and international developers and investors. The challenge for developers is to produce well located, high quality accommodation with rents that are attractive to students,” said Mr Newland.
CHART 1: Where students live - SYDNEY 2013

Source: Jones Lang LaSalle Student Accommodation Services


CHART 2: Where students live - LONDON 2013

Source: Jones Lang LaSalle Student Accommodation Services