1. Short-Term Relief for Rental Markets

• The cap on international student numbers (270,000 new enrolments) is a response to rising pressure on housing, aiming to balance demand across institutions. This slight decrease from current figures might provide minor relief for strained rental markets in key urban areas, though continued demand from domestic and other international students will still impact vacancy rates and rent levels.

2. Persistent Demand for Student Housing

• With only 76,500 purpose-built student accommodation (PBSA) beds available across Australia for the 1.4 million enrolled students, there is a significant gap in available student-specific housing. This shortage means high occupancy rates for student housing providers, encouraging the ongoing development of PBSA projects, such as the 2,200 beds expected in the coming year in Sydney and Perth.

3. Geographical Redistribution of Demand

• The cap encourages a redistribution of international students across universities, particularly benefiting institutions in regional areas or those with fewer existing international students. Regions like Tasmania, Western Australia, and emerging markets such as southeast Queensland may see an uptick in housing demand as their student intake grows, opening opportunities for new PBSA developments in these areas.

4. Growth in the Development Pipeline

• A development pipeline projecting an additional 7,000 student rooms by 2027 reflects strong investor confidence, despite policy changes. The influx of offshore investment, with entities like Blackstone and groups from Singapore and Canada, highlights the sector’s resilience, with student housing investments still yielding competitive returns, often sub-5% in popular markets.

5. Investment and Development Opportunities

• The cap may push housing providers to consider new locations with unmet demand and fewer existing facilities. Regions beyond traditional urban hubs could become focal points for new PBSA developments, particularly in areas with competitive residential markets but low PBSA density.

6. Resilience of the Student Housing Sector

• Despite fluctuations in student numbers due to policy changes, the student housing sector remains strong. The continued imbalance between housing supply and the growing student population suggests sustained investment interest, as developers look to capitalize on this undersupplied market. The sector’s adaptability to fluctuating demand and market dynamics supports its ongoing growth.

7. Outlook on Market Trends and Investor Sentiment

• The sector’s appeal to cross-border investors, evidenced by recent high-value transactions, shows that the student housing market in Australia remains attractive for long-term investment. Competitive yields and consistent growth projections make it likely that student accommodation will remain a robust investment, even if international student numbers fluctuate slightly due to policy caps.