Alternatives Outlook 2024 Report

EDUCATION

The Australian education real estate sector is a broad encompassing sector which Cushman & Wakefield has come to define as including university buildings, on campus student housing, childcare assets and the currently limited local K-12 sector. This categorisation is largely reflective of mandates across global investors seeking to pool assets across these relatively fragmented and highly operator-owned sub-sectors – a trend not just limited to Australia. Prime education assets typically command competitive yields often in line with core sectors. This is driven by high levels of covenant security with blue-chip education providers typically commanding long lease terms and demonstrating high rates of renewal. Major transactions across the education space in 2023 were certainly reflective of this with both major direct transactions

commanding yields below 5%. Going forward, international schools circling the Australian market are likely to be the key driver for creating a K-12 investable product in Australia. Furthermore, on-campus concession style student housing opportunities are expected to be highly sought after across real estate investors expanding real asset mandates into the infrastructure market. Looking ahead to 2024, given the residential rental pressures being experienced across Australia we anticipate that there will be further on-campus student housing opportunities in partnership with universities as they continue to address student livability. This may widen the market outside of PBSA for offshore capital looking for student housing exposure and will also appeal to infrastructure investors given the nature of the on campus investment model.

KEY TRANSACTIONS

Size AUD

Type

Name

Yield Buyer/ Investor

Date

Explorers Early Learning

Direct

20.5m 4.6% Private Investor

Jun-23

UNSW Kensington

Keppel Corporation

Direct

80m 4.95%

Jul-23

K-12 Independent School Campus

Fund Through

Keppel Corporation

120m -

Oct-23

Sector size estimate: AUD 56 billion Prime yield range: 4.50%-6.00%

| AUSTRALIA ALTERNATIVES 14

CUSHMAN & WAKEFIELD