Alternatives Outlook 2024 Report

PURPOSE-BUILT STUDENT ACCOMMODATION

Figure 3: PBSA RENTAL GROWTH STUDIOS ONLY

$0 $100 $200 $300 $400 $500 $600 $700

The Australian purpose-built student accommodation (PBSA) sector consists of privately and centrally owned and managed off-campus student housing. Investor inquiry into the PBSA sector was elevated in 2023 driven by investors seeking higher yield spreads to financing costs (as opposed to core RE and BTR) and direct access to operational products. However, the PBSA market has remained tightly held in recent years limiting transactions volumes. The major transaction of the year was Blackstone's acquisition of Student One, marking Blackstone’s entry into the Australian PBSA market and highlighting the appeal of Australian PBSA fundamentals to major offshore institutions. PBSA rental rates remain at record highs with further growth expected in 2024 and 2025 as broader rental supply remains subdued. Despite yield de-compression in 2023, strong operational

performance and consequent NOI growth has limited impacts on capital values. In late 2023, the Australian government announced an intended reduction in student visa approvals to curb record levels of migration. However, this is anticipated to have limited effect on the PBSA sector given the government’s focus is intended to scrutinise potentially illegitimate private education providers as opposed to students at major universities –the primary occupants of the PBSA sector. Student housing industry bodies and universities have largely been supportive of the policy so far. Cushman & Wakefield expects PBSA to remain a highly favored alternative market in 2024 as tailwinds continue to solidify. Sector size estimate: AUD 20 billion

+4.0%

+20%

Semester 2 - 2022 Semester 2 - 2023 Semester 1 - 2024

Source: Cushman & Wakefield Alternatives Research *Studios only

KEY TRANSACTION

Size AUD

Buyer/ Investor

Type

Name

Yield

Date

Student One

Platform

530m ~6.3% Blackstone Sep-23

Prime yields: 4.75% - 6.25%

| AUSTRALIA ALTERNATIVES 11

CUSHMAN & WAKEFIELD