Campus Quarter

AUSTRALIAN PROPERTY INSIGHTS

CAMPUS QUARTER

CAPITAL MARKETS

GROWING INSTITUTIONAL DEPTH PBSA has evolved from a niche alternative into a core component of institutional living strategies. Over the past decade, the sector has attracted increasing interest from both domestic and offshore capital, drawn by a combination of defensive cashflows, demand resilience, and a structural under-supply backdrop. The student tenant base is seen as stable and less volatile than transient renters in traditional residential markets. GLOBAL CAPITAL STILL ACTIVE PBSA continues to attract global capital, even amid broader caution across real estate sectors. The latest ANREV Investment Intentions Survey saw 43% of respondents identify PBSA as a preferred investment sector in APAC. Large-scale transactions in the US and UK – often involving multi-asset platforms or institutional JVs – reflect long-term conviction in student housing’s demographic resilience and income stability. In Australia, while total volume is smaller, the deal profile has evolved. Early-stage acquisitions (2015–2020) focused on growth platforms and development pipelines. In recent years, capital has pivoted toward: • Stabilised platform acquisitions, such as Greystar’s AUD 1.6bn purchase of the Wee Hur portfolio, and Blackstone’s AUD 530m acquisition of Student One. • Partial interest stakes, such as GIC’s AUD 500m investment in Wee Hur in 2022. • Joint ventures and fund-through deals, often in partnership with local operators or developers. Notably, higher interest rates have not fully reversed yield compression – suggesting that investors are willing to price through the rate cycle based on asset scarcity, income durability, and longer-term positioning.

By comparison, prime BTR yields have compressed to the low- 4’s in Sydney and Melbourne. Factors driving yield positioning: • Operational intensity: requires dedicated on-site management, leasing and student services. • Turnover structure: With most leases on 6 to 12-month terms, operators manage higher tenant churn but benefit from more frequent repricing cycles. • Demand defensiveness: Student demand is relatively inelastic and counter-cyclical, supporting cashflows through downturns. Liquidity remains constrained not by demand, but by stock availability. Most large PBSA portfolios in Australia are now institutionally held or backed by long-hold capital, meaning traditional exit opportunities are rare. As a result, future activity is expected to concentrate around recapitalisations, development pipelines, and GP-led secondary transactions, rather than open-market sales. We have also seen the emergence of sustainability-linked financing for the sector, a theme which is common in Europe. The most notable example is Scape’s conversion of $1.4 billion loan into a sustainability-linked loan (SLL) to assist in meeting its environmental, social and governance (ESG) targets. SCALABILITY AND REINVESTMENT As the sector matures, attention is shifting from asset selection to platform scalability and long-term alignment. The recent transfer of Scape’s portfolio into an open-ended fund structure marked a pivotal moment – creating one of the largest unlisted real estate vehicles in Australia and signalling a more permanent capital orientation for the sector. This shift opens the door to greater reinvestment capacity, capital recycling, and co-investment opportunities.

PRIME STABILISED YIELD

4.75% SYDNEY

5.00% MELBOURNE

5.50% BRISBANE

5.50% CANBERRA

5.75% ADELAIDE

5.75% PERTH

Cedar Pacific UniLodge. Kensington

CUSHMAN & WAKEFIELD