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Develop Single-Purpose Uni Facilities ‘At Your Peril’

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Developers looking to enter an education sector weakened by the impact of Covid-19 could reap the rewards from the coming influx of overseas students next year, but must remix their approach and understand the risks, property experts say.

Maddocks partner Nick Sparks told The Urban Developer many top-tier developers and educational institutions were working to find balance after a torrid 2020, preparing for the “upswing” when it arrived.

The law firm works closely with the property industry and universities to initiate joint ventures and partnership agreements.

“The sector has clearly been affected by the pandemic, but a sector that until recently was Australia’s number three export doesn’t disappear overnight,” Sparks said.

“In our view the education sector has, like many asset classes, undergone a ‘step shift’ in response to issues presented by the pandemic.

“A move to more online learning will ultimately result in a more blended model of on-campus learning and in the short to medium term will present a number of opportunities.

“This includes freeing up space to allow for co-location with other educational bodies and a greater implementation of technologies.”

Before the pandemic, the Department of Foreign Affairs and Trade data put the export of international education, including spending on tuition and living expenses, at more than $38 billion annually, behind iron ore and coal—which both bring in over $60 billion.

According to the Mitchell Institute, approximately $21.4 billion of the $38 billion in annual revenue associated with international education comes in the form of goods and services spent in the wider economy.

Students Return Australia
▲ Both universities and accommodation providers have had to rapidly adapt to travel restrictions, government orders and border closures.


University revenues dropped by $1.8 billion last year, with a further $2 billion fall predicted in 2021 as borders remain closed to overseas students.

Pressure has also mounted on universities and PBSA providers due to ongoing sporadic lockdowns leading to learning from home becoming common practice which in turn has seen competition from online providers tightened.

In addition, international student enrolments dropped 14.4 per cent—or more than 200,000 students—in the year to May, 2020.

Despite NSW piloting a program to receive a small number of students from a specific selection of countries in the coming months, international students are not expected to return en masse to Australian campuses until next year.

JLL head of strategic consulting David Brown said even though there had been a growing number of high-rise university projects across the country, lessons would have to be learnt by educational institutions to recognise the huge disruptions to cash flow presented by the pandemic.


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“My experienced opinion and advice for the sector is that [if you’re] building a single purpose university complex in the current environment, then do so at the owner’s peril,” Brown said.

“I am aware of some tertiary institutions applying and achieving capital funding for more facilities or buildings which they will ultimately have to maintain ... adding to a high level of existing stock of assets that are not being fully utilised.

“Form follows function and attracting and retaining students, workers and academics will require creating great environments to encourage people to come together again in person.

“My view is that mixed-use precincts will progress with education as anchor tenants that will attract business and amenity, creating great places that enable activity during and outside business hours.”

Brown said developers and universities were now working together to deliver a “higher quality” of development to complement historically strong fundamentals—as long-term managed investments with a strong tenant covenant.

An artist's impression of the Parramatta/Westmead campus.
▲ In December, the NSW government and University of Sydney signed a framework agreement to develop a new campus in Parramatta.


Slattery director Belinda Coates said that leading up to the pandemic, developers had become increasingly interested in understanding the PBSA sector and the chance to partner with major universities.

“Developers could see the opportunity to link commercial office, retail and residential with the benefit of campus foot traffic and the share of the international student wallet,” Coates said.

“Post-pandemic, universities are realising the true benefit of these partnerships as an opportunity to raise revenue while creating real value for the student community.”

Coates said the pandemic had accelerated the conversation of the “sticky campus”—a place where students choose to be rather than had to be.

“One key consideration for vice-chancellors will be to redefine what makes the campus ‘sticky’ in a post-pandemic world,” Coates said.

“Industry partnerships will be key as each university defines its position in the market, embraces its geographic context, discovers the needs of the local community and finds industry partnerships that can support its long term sustainability.”

Belinda Coates will speak along with Nick Sparks, David Brown and Western Sydney University strategic planning manager Michelle Lee at The Urban Developer’s coming Education Development vSummit on Thursday, June 24.

Their panel discussion, University and Industry Partnerships, will investigate how the private sector can tap into the development of existing and new education assets.

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Article originally posted at: https://www.theurbandeveloper.com/articles/pbsa-purpose-built-student-accommodation-education-development-australia