Foreign Money Chases Student Digs in Canberra

Foreign investors are lining up to pounce on a 400-bed student accommodation complex in Canberra—a stone’s throw from Australian National University—just weeks after the project was approved for development but at least two years before it’s built.

“Very strong,” said Mark Thompson of Ray White Commercial, when asked about interest in the sale of the project in Braddon, about 6km north of the heart of the national capital.

An expression-of-interest campaign for the six-storey, mixed-use project ended last week.

Thompson would not be drawn on the number of applicants they’d received, but said from the “inquiries they’d had, the commitment capital was predominantly from overseas”.

The interest had been from the US and Asia, in particular Singapore.

“I guess the other part of that is, certainly in Canberra, a large portion of the demand for student accommodation is from Southeast Asia,” Thompson said.

“So, there's an understanding, and an acceptance I think, of the student accommodation market in Canberra because there is such a heavy weighting towards Asian students.”

▲ An expression-of-interest campaign for the six-storey, mixed-use project ended late this week.

Foreign capital in Australia’s purpose-built student accommodation (PBSA) has been growing in the past 12 months, with investors looking at the sector as a hedge against rising inflation in much of the developed world.

This month, the chief executive of Brisbane-based Cedar Pacific, Bernard Armstrong, said offshore investors were reacting to strong occupancy rates in Australia’s PBSA.

An unnamed Canberra builder-developer gained approval for the Braddon project on 3000sq m in Mort Street, which includes 406 one-bedroom units, four ground floor retail tenancies and basement carparking for more than 60 vehicles.

It also features dedicated study areas, a gymnasium, a music room and laundry, as well as two central courtyards and communal open space.

The accommodation will be within walking distance of Australian National University and the University of New South Wales Canberra’s planned new campus at Reid.

Higher education is the second biggest industry in the ACT after the Commonwealth public service and, in pitching the sale, Ray White described the proposed student accommodation as “in an under-supplied market”.

Canberra’s reported shortage is in keeping with the rest of the burgeoning industry in Australia. Last month an industry leader warned the country needed to be prepared to triple the number of beds available for international students.

Yugo managing director in Australia Tim Klitscher told The Urban Developer there were real opportunities for investors to get into the growing Purpose-Built Student Accommodation sector in Australia.

Ray White's Thompson said his client was selling a turn-key development.

“What he's proposing is to build the development and then sell it to an owner-operator or put in place a management agreement with one of the big student accommodation providers,” Thompson said.

“Some of those operators are backed by foreign capital, or local capital,” he said.

“So part of our job once we've got all the EoIs in, may be actually teaming up an operator with the investment source and putting the deal together that way, whereas a lot of the operators already have a capital partner in tow.”