Brookfield Makes Student Digs Debut with Carlton Plan

The Canadian investment giant Brookfield is making its first foray into Australia’s growing Purpose-Built Student Accommodation Sector with plans for a 400-bed building on the city fringes, directly opposite the University of Melbourne.

Brookfield’s Asia-Pacific office confirmed this week they were teaming up with local property developer Citiplan and its student accommodation operator, Journal Student Living, on the project at the corner of Bouverie and Grattan streets in inner-city Carlton.

Brookfield’s head of real estate investments in Australia Ruban Kaneshamoorthy said the development was a seed investment in what they hope will become a $500 million pipeline of assets.

He said there was a strong investment case for PBSA in the Australian market, as the sector rebounds from the heavy disruptions of Covid.

“We've been tracking how to enter the Australian market for some time,” he said.

“Specifically in the Australian context, we could see education is a key driver of the economy. And we continue to see that it's going to grow right from the Asian middle class that wants the quality of Australian education.”

▲ Brookfield's investment will be across the road from the University of Melbourne, in Carlton.

Outside Australia, Brookfield is already a major player in the student accommodation sector with 197 assets and more than 55,000 beds in the US, and parts of Europe.  Its sector portfolio is valued at about $10 billion.

The Australian PBSA sector is in rebound mode, with major operators all reporting a strong return to business, saying they are buoyant about getting to pre-pandemic levels within 12 months. Brisbane and Sydney are particularly strong with reports of second-semester occupancies between 80 and 90 per cent.

Brookfield’s joint venture acquired the Carlton site through an off-market deal with unnamed private investors for an undisclosed amount.  Planning approval is before Melbourne City Council and building completion is expected by 2025.

“With this particular opportunity, it came about because we had met the Citiplan and then the Journal Student Living guys, about three years ago,” Kaneshamoorthy said.

“They were looking to sell some assets. We looked at buying them, then I think the view was, it was a bit too core for us. 

“But we really liked the team and were very keen to support them.  That was really the genesis of the entry point. It was then a matter of whether we bought established assets or developed them on our own.”

Kaneshamoorthy said the Melbourne site will soon be followed by more projects in the pipeline as the venture targets assets across Australia and New Zealand, including in Brisbane, Sydney and possibly Perth.

“Now, I think from our perspective, we're keen to continue to find more sites and obviously develop more stuff,” he said.

“For us that means Melbourne. Sydney is challenging, but you know, it is do-able. There have been other operators who have managed to make it work in Sydney.

“Brisbane is an interesting one, because going back probably three or four years ago, they were quite an oversupplied market.  But because there was no new supply that was absorbed quite strongly and the quality of their offering got a lot better because of a bit more competition.

“We definitely see Brisbane as a market that will continue to perform strongly, especially in the post-Covid environment.”