PBSA market nears pre-pandemic peak with $2.3 billion in deals over two years
The student housing sector in Australia is witnessing a surge in investment, driven by a rebound in international enrolments and a renewed influx of capital from global investors.
Industry stakeholders say purpose-built student accommodation (PBSA) could soon surpass its previous annual peak of $2.5 billion in investment, as demand intensifies following the pandemic-induced slowdown.
Investment into the sector hit a high of $2.5 billion in 2020, just before COVID-19 lockdowns disrupted construction and capital flows. Activity then slowed sharply but has since regained momentum. Over the past two years, more than $2.3 billion in large-scale deals have been recorded, signalling renewed investor interest.
Yields on PBSA assets are now ranging between 5% and 5.5%, positioning them as more expensive than some premium CBD office assets.
Since January, deal volume has grown steadily, supported by favourable exchange rates and more stable immigration policies. Market analysts suggest the outcome of the federal election has eased concerns, especially after the Coalition’s proposed cap on international student numbers failed to materialise.
According to research from Ray White, international student enrolments reached over 1.09 million in 2024 — a 15% increase from pre-pandemic levels.
Among the major deals this year, real estate giant Greystar acquired a portfolio of seven PBSA buildings from Singapore’s sovereign fund GIC for $1.6 billion. The properties span key university cities including Sydney, Melbourne, Brisbane, Adelaide, and Canberra. Another significant acquisition was M&G Real Estate’s $97 million purchase of a UniLodge facility in Melbourne.
Vanessa Rader, head of research at Ray White, said PBSA operators were seeing full occupancy and long waiting lists. “The demand is very, very high,” she told The Australian Financial Review. “It’s not just international students, it’s domestic students too. These overseas groups, where student housing is much more of an established asset class, they can see the benefit of them.
“It’s a good asset class that has high occupancy, rents are growing because occupancy is high, so now it would be a good time to buy, because the currency risk isn’t really there.”
While New South Wales and Victoria continue to dominate the student housing landscape, Queensland is emerging as a growth area, with Brisbane seeing strong gains in both investment activity and student numbers.
Regional areas like Wollongong and Perth are also under pressure, following legislative shifts that have directed more international students to study in smaller or regional institutions. Rader noted a lack of student accommodation in these areas.
“Student housing is concentrated in the major cities, not in the regional areas,” she said. “It’s become more of an issue in those regions just because that change in legislation [is] allowing more students to go to those regional markets.”
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