[+] Student Accommodation Sector in $1.5bn Hole

The country’s biggest provider of accommodation for university students, Scape, is pressing ahead with 17 new purpose-built student accommodation (PBSA) buildings, despite its portfolio of rooms sitting at just 25 per cent occupancy. Since the onset of the pandemic, the closure of the international border and the loss of foreign students, who are not expected to return until the beginning of next year, have devastated the sector. International education in Australia—the country&#x27;s third-largest export industry and worth $40 billion to the economy—has stalled in the last 12 months with the knock on effects expected to create $1.5 billion in losses this year across the PBSA sector. In this TUD+ Briefing, Scape Australia co-founder and former real estate investment banker Stephen Gaitanos discusses the mounting pressures the PBSA sector is facing in the wake of the pandemic. “The border closures are devastating and currently Scape has 13,000 student apartments sitting empty,” Gaitanos told The Urban Developer. “We need to now work with the government to articulate a response that helps them bring back students. “The reality is right now we are sitting down with our banks, extending debt where we need to and having those tough covenant conversations.” Scape, whose portfolio in Australia is backed by institutional investors including National Pension Scheme of Korea, AXA, Allianz and APG, has built nearly 4000 student rooms since the onset of the pandemic. In Australia, it owns and operates 15,000 accommodation bedrooms, with a further 10,000 under development nationally. Gaitanos said Scape was confident that by the time its new facilities were completed, international borders would be reopened. “The macro thesis around why Australia, why education, why PBSA, hasn’t changed,” Gaitanos said. “Yes, this has been a short-term shock, but our investors—who are some of the biggest pension funds globally—are here to invest over the long term and know we are going to ride through this trough. “I’m not sure all PBSA providers will be able to do that as they don&#x27;t have the balance sheets, equity sponsors and scale of operation to ride this out as these are operating assets with heavy staff load, heavy payroll and heavy operational expenditure.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. From $29 per month, you will receive access to exclusive news, analysis, features and video content designed to help you make more informed property decisions. Click here to register interest for early access

[+] Student Accommodation Sector in $1.5bn Hole

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[+] Student Accommodation Sector in $1.5bn Hole

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