The investment thematic for student housing has never been stronger. Despite the significant weight of capital looking to enter the sector, global transaction volumes look set to hit a near 10-year low. Consistent with many commercial real estate asset classes, global student accommodation capital markets have been challenging in 2023.
Operational performance across Australian markets is at record levels with vacancies almost non-existent and rental growth into Semester 1 2024 across the market well into the teens. After two and a half lean years during the pandemic, owners are now enjoying strong growth in operational revenues, with many of them reluctant to consider selling assets. Rebooking rates for next year are also at record levels, with 40% at the end of October a consistent level through many off-campus properties and up to 85% recorded.
Whilst other property sectors are showing cap rate expansion attributable to the macro impacts of interest rate rises over the last 12 months, and uncertainty prevailing over Investment Committees decision making processes, Purpose Built Student Accommodation (PBSA) yields remain relatively unchanged throughout 2023, in part also due to the lack of liquidity.