Student accommodation is big business for property developers and as the demand rises, so too will the sector gain traction as a viable asset class in the real estate investment trust sector.
Globally, its big business with $US14.9 billion ($19.6 million) invested.
Studio 8 student accommodation in Ryde, Sydney. Photo: Supplied
According to Knight Frank research, during the next five years development of close to 40,000 new purpose built student accommodation (PBSA) beds is expected across Australia, as domestic and global institutions awaken to the potential of this maturing investment class.
This follows two years of above historical supply, with 10,200 beds delivered to the market, the equivalent of 11 per cent of total stock.
Following this growth in the purpose built student accommodation sector is interest and activity in the Australian residential private rented sector (PRS) or the Build-to-Rent (BTR) concept, as it is known in Britain, or the established Multifamily Housing sector, as it is termed in the US.
This high demand from within and outside Australia for student accommodation, has seen the opening of a $20 million development in Ryde, Sydney, by Studio 8 Residences.
The 88-room 8 Tucker Street, is now open and features a combination of five-star student accommodation with six-month and one-year leases in rooms with one and two bed spaces.
More than 80 per cent of the suites have been leased by overseas students who want easy access to Macquarie University and other tertiary institutions across Sydney’s north western region.
Studio 8 also features short-term executive accommodation, which is being utilised by universities and major companies in the area for interstate and overseas staff visiting Sydney.
The property has been designed by architects, Marchese Partners and built by Statewide Constructions Pty Ltd.
Studio 8 operator, Sydney Student Living, is planning a range of other facilities in Sydney, while investigating opportunities in other high demand areas of Wollongong and Newcastle.
General manager of Sydney Student Living, Benjamin Bishoy, said: “We have designed our facilities to create luxury standard, student accommodation at a reasonable price, with affordable and all-inclusive rates which include meals and free use of our many amenities.”
The creation of the facility comes in response to the very strong number of overseas students coming to Australia. That figure grew 11 per cent last year to 554,179, according to the Department of Education and Training.
The number of foreign students is expected to grow annually by more than 10 per cent over the next five years, with universities such as Macquarie University forecasting rising accommodation demand.
The Ryde facility is the second development of Studio 8 and its management group Sydney Student Living, with their first 80-room building, opened four years ago in Concord, operating close to 100 per cent occupancy.
Studio 8 is also in the final stages of gaining approval for its largest development to date, a $60 million, 200-bed space facility near Macquarie University on Waterloo Rd and is expected to open in late 2018.
The Waterloo Road property is expected to again combine long-term student and short-term executive accommodation, as well as a range of amenities for both groups.