Melbourne and Sydney top global education destinations

Melbourne and Sydney top global education destinations

10 May 2019

Melbourne and Sydney have been ranked among the top ten cities for internationally mobile students, according to new research from CBRE.

While Paris and London were the top-ranked cities for international students, CBRE’s fifth annual Global Living report shows that Melbourne and Sydney were ranked 3rd and 6th respectively amid indications that global students—particularly those from Asia Pacific—are becoming increasingly mobile.

This is having a flow-on effect in the investment market, with heightened interest in student housing as international enrolment numbers grow and investors consider higher yielding property asset classes.

“With commercial property yields at all-time lows in traditional real estate sectors, investors are increasingly looking elsewhere for return. This, coupled with growing student demand, has led to rising interest in the purpose-built student housing sector,” CBRE Hotels/Student Accommodation Director Rosie Young said.

“Nine percent of investors identified student accommodation as the most attractive alternative real estate sector, up from 4 per cent the previous year. This represented the biggest increase after data centres,” she added.

Australia’s slowing residential market has increased the viability of student housing projects and helped fuel investor appetite, with a large pipeline of about 18,000 beds over 51 projects proposed between 2019 and 2023.

Melbourne accounts for 44 per cent of the pipeline followed by Perth and Brisbane at 15 per cent and 12 per cent respectively, with Sydney the laggard at circa 5 per cent.

“While the Australian student accommodation sector is still in the development phase, commercial operators such as Urbanest, Scape, Iglu and the Student Housing Company are expanding in the market and transaction activity is expected to increase,” Ms Young said.

The AFR reported last week that Urbanest, Australia’s fourth (soon to be third) largest student accommodation owner, has been listed for sale for an estimated $2 billion.

Urbanest currently has 14 operations assets in Australia, split among Sydney (7), Melbourne (4), Adelaide (2) and Brisbane (1), with an additional site in Melbourne due to be operational in 2021. All up, it would mean a portfolio of 7,402 beds.

Industry experts say Australia’s student accommodation market is heavily undersupplied when compared to the likes of the US and UK, with only one bed to every 10.5 university students.

According to Savills Australia, 10,850 new student accommodation beds entered the market in time for the 2019 academic year, taking the national stock count to 87,052 beds, says The Sydney Morning Herald.

Savills are tracking a further 28,000 beds with the potential to be delivered by the end of 2022, 46 per cent of future pipeline is located in Melbourne.

Steady growth in student numbers is a worldwide phenomenon and has increased more than two and a half times over the past twenty years. This reflects both population and economic growth, especially in Asia, with expectations that by 2030 there could be as many as 276 million students worldwide.

Alongside growing student numbers, the international mobility of students is also increasing.

Since 1975, the number of students enrolled for higher education outside their country of citizenship has grown nearly six-fold, with the latest UNESCO figures suggesting there are currently over five million internationally mobile students worldwide.

The Asia Pacific region has the most internationally mobile students, with China at the top.

Between 2014 and 2015 alone, the number of students from China and India increased by 43,000 and 52,000, respectively.

The ability to learn or improve English language skills is a pull factor alongside other factors, such as cost of living and lifestyle, which drives the decisions on which city to study in, alongside the quality of education and the potential post-graduate job opportunities.

“It is no coincidence that cities with a high share of international headquarters attract a high share of international students, as highlighted by the fact that Paris, London, and Melbourne all have over 100,000 international students currently studying,” CBRE Research Manager Joyce Tiong said.