Student accommodation giant Iglu is targeting a half-dozen Sydney universities and colleges with an 18-storey mixed-use tower—its second development along the inner city’s Anzac Parade.
Iglu has lodged plans with the Randwick City Council for 300 student accommodation beds within 285 rooms across 16 floors above a three-storey podium built around a landscaped courtyard.
Bates Smart Architecture won a design competition to create a design for the $53-million development across four lots totalling 1580 square metres. They will retain the facades of four existing 1940s buildings across the front of the podium.
The development is described as “a car-free building” with a single-level basement given over to offices, bicycle parking and end-of-trip facilities.
But Iglu’s application pales next to its other plans for a huge 1000-bed development on almost a hectare, also on Anzac Parade, and just 550m from their Kingsford application.
Iglu, which is backed by Singaporean sovereign wealth fund GIC, won a competitive tender for a 99-year lease on the site owned by the University of New South Wales, just across the road from the institution’s Kensington campus.
Iglu director Jonathan Gliksten said they expected to file a development application for that development in the next two months, after planning and design work with UNSW’s estate management and council.
“We put forward a proposal to the university for 1066 student accommodation beds and about 3000sq m of retail,” Gliksten told The Urban Developer.
Iglu’s concept—next door to the National Institute of Dramatic Arts (NIDA)—will include five student accommodation buildings, office space, car parking, retail tenancies and food and drink facilities.
“The high-profile location will focus on student experience and the creation of space that attracts and enhances the living, learning and socialising of our students, and is an attractive addition to the Kensington community,” UNSW chief property officer Jeff Peers says.
Anzac Parade and its surrounds are fast becoming a hive of purpose-built student accommodation (PBSA) activity—and Iglu is not alone.
Two years ago, leading speciality investment manager Cedar Pacific entered Sydney’s student accommodation market after taking control of an $80-million “super site” in Kensington. The amalgamation of 24 privately-owned properties made up more than 4000sq m of land.
Others have followed and the NSW PBSA market now supplies 16,500 beds to students.
But despite having 11 universities, that bed number is still considerably lower than Victoria which provides more than 26,000 beds in about 60 PBSA buildings.
Glicksten describes Sydney as the biggest market, but a challenging one.
“It’s very difficult to find sites in Sydney,” he says. “Land prices are very high. And we’ve only got to those two properties.
“And, obviously that’s now been compounded by very high construction costs, which have gone up about 25 per cent in the last year. It is challenging, there is no doubt about it.”
The Property Council of Australia has warned more investment is needed to develop student accommodation if the sector is to house a projected 700,000 students by 2027.
In a report released this week, the council said PBSA has already played a crucial role in the nation’s economic recovery, pumping in about $40 billion or 2 per cent of gross domestic product a year, while also alleviating demand in a tightening local rental market.
During the past decade, the national PBSA bed total has grown to 76,500 in 200 developments and will edge closer to 100,000 by 2025, based on projects currently in planning or development stages.
About 521,000 international students are enrolled and studying in Australia, spending on average $4400 a month, just shy of the average Australian.
Gliksten agrees, saying most student accommodation providers have now recovered to full occupancy.
“So that’s indicative of the very strong demand for student accommodation. And probably about 30 per cent of Chinese students have still not yet returned to Australia. So yes, there’s definitely the demand there.”
While the sector services students from 170 countries, a large source of demand is local students with 26 per cent of students Australian, second only to the 27 per cent coming from China.
In releasing the report, Student Accommodation Council executive director Torie Brown said there had been a clear shift amongst domestic students now turning to PBSA because of extremely tight residential rental markets and the superior offering of PBSA that is customised to their needs.
“Without PBSA, we would have tens of thousands more people hunting for rentals in an already tight rental market, which would drive prices to even more unaffordable levels,” Brown says.
Australia’s PBSA sector has traditionally relied on foreign investment as there is limited domestic experience with the asset class historically due to perceptions around short-term tenancies.
For foreign investors, many levies and taxes around the country continue to disincentivise international investment.
PBSA providers are governed by Residential Tenancy Acts (RTAs) which often do not separately define the asset class. Agreements are often treated identically to private rentals or boarding houses, despite significant differences between the two forms of accommodation.
Brown says state governments and local councils should ensure that zoning and development approvals are transparent, accessible, and prompt to support PBSA development and prepare for the next wave of international students.
“The development of new PBSA assets needs to be considered in conjunction with policies to increase and grow Australia’s share of international students and supports surrounding international education,” Brown says.
“Otherwise, the government is encouraging students to move into competition with existing Australian residents within the private rental market without increasing student housing options.
“Right now, governments need to be looking at how they can remove the barriers to investment in this asset class.
“Cutting foreign investor taxes—will ensure we have enough beds to service growing demand, including from domestic students and avoid placing greater pressure on an already-tight rental market.”
Education remains Australia’s fourth-largest export behind iron ore, coal and gas, and international education is the country’s largest services export.
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