SSKB’s Development Consulting service is about getting it right from the start. We are expert in strata schemes across Victoria, QLD and NSW, delivering body corporate and owner’s corporation levies that are ‘at market’ while identifying ways to increase developer’s margins even before construction begins.
The debate between the need for student accommodation and the ability of the new apartment sector to meet this need is the topic of this issue of SSKB’s Developer Consulting newsletter.
In our July newsletter we touched on the economic impact of International students on the wider Gold Coast community. 14,000 international students contribute almost as much as the 819,000 annual international tourist visitors. The International students who may reside on the Gold Coast for up to three years while competing a degree; contribute over $770 million dollars or $55,000 per student per annum, while international tourists spend around $1,220 per person during their stay.
It is understood that a student who stays on to complete a 3 year degree can expect their parents to visit them at least twice while they are in Australia. So the synergies between international students and overseas tourist numbers are clear. While domestic Australian students also form part of this demand for accommodation, this article will largely discuss the requirements of international students.
The graph below shows the increasing numbers of international students in both University and English Language courses (ELICOS) enrolling in Australia. The majority of these students ELICOS students (65%) then go on to enrol in higher education or VET courses.
Source: Australian Government Department of Education – January 2015
The factors effecting supply and demand for student accommodation are the same in any location across Australia.
- The Universities and Academic Institutions’ ability to market themselves overseas
- The perceived safety, lifestyle and experiential amenity of the locality of the enrolment
- The financial factors – affordability of student fees and living expenses, part–time employment opportunities
- The availability of suitable affordable accommodation for students with varying budgets in the locality
It should be understood that international students who arrive in Australia may be here for periods of study ranging from a four week English language course to an undergraduate or Masters level of study. They attend private colleges, TAFE and also Universities.
The International students may be accommodated in ‘home stay’ families usually for short periods prior to finding their own rental shared accommodation.
|Actual Student Load by State – Full Year 2014|
|New South Wales||67,969|
|Australian Capital Territory||7,815|
Source: Australian Government Department of Education 2014
Just as with the Australian students, International students come from different income groups and family backgrounds. The anecdotal stories one hears is often around the wealthy parents of a newly arrived student purchasing an apartment for the student to live in while studying in Australia. This certainly does occur in markets where the other factors are supportive of residential investment; as yet I have found no evidence that this is a significant segment of apartment sales.
The student accommodation sector has a number of institutional players including Uni Lodge and Scape Living. These companies design and operate purpose built student accommodation which offers full support models including meals and cleaning of rooms. These buildings are a one use design and lease out rooms and board for a prescribed period. Generally speaking these ‘accommodation colleges’ are assigned to a particular University for use of those institutions’ students.
The student accommodation market is evolving to be more responsive to student’s requirement to live in inner city locations. The Brisbane City Council is offering developers infrastructure charge reductions as incentives to construct student accommodation in the city. Up to May 2015 The BCC had received development applications for 3,000 rooms.
Wee Hur Holdings plans to build a two stage development in Buranda TOD on a site opposite princess Alexandria Hospital. The first stage is planned to have 450 rooms over 14 storeys, including 58 ‘suites’ of six bedrooms. These suites will have communal living rooms and laundry facilities. Valparisio Capital is planning to offer 705 beds in a regenerated office block under a managed accommodation model. I believe that a dedicated student accommodation has a place in the spectrum of demand and will find a market which will allow for the further growth in the Student numbers enrolling at Australia’s education institutions.
Shared accommodation, group households, is a traditional model for University students living away from home to share costs and enhance the social experience of living in Australia while studying.
It is far more representative to find students leasing houses and apartments in the open market. Affordability is a defining factor in the uptake of residential stock by students. In this regards they are very much competing with Australian residents for the same rental accommodation.
Apartment development in locations that are favoured by students will meet a demand for rental accommodation in these locations. It may well be that investors in these projects will come from overseas, or Asia in particular. These sales however will be in the most part driven purely by the marketing methods used by the developer and by the investment returns expected.
We look forward to continuing growth in the apartment markets. I will continue to monitor the supply of student accommodation beds and affordable apartments in and around education establishments to monitor the supply and sales SSKB Development Consulting and our experienced Community managers are well placed to support the developers and residents of the next generation of Gold Coast residential apartments.
SSKB’s New Projects Manager, Kerrie Young is experienced in both Property Market research and Project sales and marketing. She maintains an overview of trends in supply and demand in the property markets in which our clients operate.