World’s tallest student digs planned for Melbourne

World’s tallest student digs planned for Melbourne

20 October 2017

UK-based accommodation provider Scape Student Living is planning the world’s tallest student digs, a 60-storey tower in the Melbourne CBD, overlooking RMIT University, reports the AFR.

The $300 million-plus project will, if approved, comprise 740 student beds, along with 146 city living units, according to plans submitted to the state government.

The proposal for the Franklin Street site includes a small component of retail space, along with more than 11,500 square metres of commercial space, which could incorporate some academic use.

“It is the largest development that we’ve undertaken globally and it will be, when it’s built, the tallest student accommodation in the world,” said Craig Carracher, who co-founded the Scape platform in Australia.

The project sits on a 2000-square-metre site at 97 Franklin Street which Scape bought late last year for $56 million. Its previous owner had plans approved for a 62-storey tower.

It is one of a series of student accommodation projects Scape hopes to develop into a $1 billion portfolio in Melbourne’s inner-city university precinct.

The apartments can lay claim to being one of the first efforts in Australia to create “build-to-rent” investment.

A block away on Swanston Street, Scape has also submitted plans for a plot of land it acquired two years ago on the old CUB brewery site from Grocon. The 30-level tower will deliver as many as 870 student beds.

Also on Swanston Street, directly overlooking RMIT, Scape’s first student accommodation effort in Melbourne, a 780-bed tower, is rising fast.

And nearby, Scape is eyeing two more prospective sites that it hopes to redevelop into more student digs.

Backed by global investors Bouwinvest, APG and China’s ICBCI International, Scape owns 10 developments in Sydney, Melbourne and Brisbane, establishing itself as one of the bigger players in the fast-growing student accommodation sector.

Other players include Blue Sky Private Real Estate and its joint venture partner Goldman Sachs, which have a pipeline of 3,300 student beds.

Underpinning the rush of investment into the sector is a substantial shortfall in supply of beds for international students. In Melbourne the gap is more than 84,000 and in Sydney it is close to 43,000.

While the sector is still maturing as an asset class here, cap rates could firm to between 5.5 per cent and 6.25 per cent, according to JLL.

According to the latest research from Savills Australian Student Accommodation Market Report, Australia is now firmly entrenched as the third most popular global destination for international students studying abroad.

There were 554,179 international students studying on a student visa in Australia in 2016 which represented an 11.3% increase over 2015 figures (498,155 student visas). The top five nationalities were China, India, Republic of Korea, Thailand and Vietnam.

In Melbourne, the pipeline for delivery of new student accommodation has increased significantly in the last 12 months.

Savills 2016 research indicated a total pipeline of 9,651 beds, which has increased to 16,295 beds in 2017. This has been driven by the availability of development sites and the University of Melbourne’s 2020 strategy to increase the pipeline of student accommodation bedrooms to 6,000.

Education is Australia’s third largest export earner.