Urbis Think Tank
Student accommodation market has strong prospects, despite current challenges
The Australian tertiary market continues to be driven by strong growth in the number of international students. In its publication Education at a Glance 2010, the OECD identified that Australia had the highest proportion of international students of OECD countries at 21% compared to an average of 7%. Among other OECD countries only Austria (16%), the UK (15%), Switzerland (14%) and New Zealand (13%) were close to Australia.
The rapid development of emerging economies has resulted in strong growth in demand for international education. This is most notable in China, with 27% of Australia’s international enrolments in 2010 coming from the Asian giant.
Nevertheless, there are some headwinds for the sector. The sharp increase in Australia’s exchange rate in 2011 has placed pressures on the sector. However, the Aussie dollar has been appreciating since 2002, and international enrolments have risen strongly in every year.
Another significant risk for higher education providers is Australia’s migration policy, which is always under review. New Zealand data has shown that the tightening of this policy can negatively impact on International student levels, and the most recent Australian data is showing similar signs. The ABS overseas arrivals data shows that there has been a decline in short-term education arrivals in 5 of the 7 months so far reported in 2011.
Despite these challenges, the tertiary education market remains positive. According to IDP Education, demand for places at Australian universities is forecast to continue to grow – up from 240,000 in 2010 to nearly 300,000 in 2025. This growth is expected to continue to be driven by East Asia, and increasingly by Indian students from South Asia (although Indian student numbers did fall by 6,000 in 2010). 
Urbis’ analysis of the student accommodation market across Australia confirms an ongoing demand for more rooms to service the current and future growth. The most successful operators will continue to innovate by designing configurations that are affordable and suit the needs of the modern student – taking account the different requirements of undergraduates and postgraduates from varying countries.