Student digs investment sees $1.8 bn of deals this year – up 15 times on 2024
More than 12,000 student beds due for completion by the end of 2026 as the sector booms.
INVESTORS are increasingly targeting student digs, new data shows.
The purpose-built student accommodation (PBSA) market is booming and expected to grow even further, an update from Knight Frank says.
Four deals worth a total $1.8 billion have already been inked for 2025, which is 15 times the level in 2024, which saw $116 million worth of investment.
Knight Frank’s Tim Holtsbaum said investment volumes in the student accommodation sector were expected to rise further in the second half of 2025 – and into 2026.
There are currently 6,912 beds under construction with 2,772 beds due for completion in 2025, a 40 per cent increase on last year.
In 2026, a further wave of completions is expected resulting in 5,832 new beds.
“Last year, the lack of clarity around international student caps, coupled with a challenging macroeconomic backdrop resulted in a slowdown in the volume of transactional activity,” he said.
“Operational schemes remained tightly held in 2024, however, and owners that did bring assets to the market were rewarded with competitive bidding due to a lack of opportunities for buyers, which helped to maintain robust pricing levels.
“This year we have seen a resurgence in investor interest in the sector, with investors viewing it favourably due to its strong fundamentals, including the undersupply dynamics, student growth and counter-cyclical features, with the prospect of good risk-adjusted returns.
“We expect additional anticipated rate cuts and the prospect of greater political certainty in Australia in the second half of 2025 will lead to greater activity as the year progresses.”
Investor sentiment surveys demonstrate student accommodation is in favour with investors this year, particularly North American capital.
“Recent transactions have demonstrated that stabilised PBSA assets remain a key target for investors trying to enter or consolidate their position in the Australian market,” he added.
Knight Frank chief economist Ben Burston noted government intervention was strengthening.
“Sentiment among policymakers and stakeholders for the growth of PBSA is strengthening,” he said.
“Against this backdrop, investor confidence remains strong due to buoyant student demand, with international student enrolments well above pre-pandemic levels and near double the levels of a decade ago.
The Knight Frank update found that since 2018 there has been average rental growth of 50 per cent across Sydney, 38 per cent in Melbourne, 36 per cent in Adelaide and 28 per cent in Brisbane for studio apartments in PBSA developments.
