Australia’s Student Accommodation Boom: Insights from 2025 to 2026
Australia’s purpose-built student accommodation (PBSA) sector is witnessing unprecedented growth, driven by an influx of investment and a surge in international student enrolments. In 2025, transaction volumes skyrocketed beyond $1.88 billion, fueled by offshore investors eager to tap into this burgeoning asset class. The momentum rolls into 2026, highlighted by Centurion Accommodation REIT’s impressive $345 million acquisition of the EPIISOD Macquarie Park facility, which set a staggering benchmark at $471,000 per bed.
Rising International Student Enrolments
The appeal of PBSA is underscored by international student enrolments reaching historic highs, surpassing 1.09 million in 2024—marking a 15% increase from pre-pandemic levels. Data through October 2025 indicates that the international student population stands at just over one million across all educational sectors. This rising demand coincides with ongoing pressures in the broader housing market, presenting a compelling investment landscape for seasoned operators in student accommodation from mature markets.
Supply-Demand Imbalance
One particularly striking factor for offshore buyers is the stark difference between the number of students and available PBSA. With only approximately 90,000 beds in the privately owned sector and around 134,000 beds when including on-campus accommodations, the current supply is insufficient compared to over 1.6 million students enrolled in Australian universities annually. This chronic undersupply fuels interest from North American, European, and Asian institutional funds, which are keen to leverage their operational expertise in a market that remains relative to more developed countries like the UK and US.
Escalating Transaction Prices
The scarcity of student accommodation has pushed transaction prices to unprecedented levels. In Sydney, cap rates have compressed to as low as 4.75%, although this trend is beginning to stabilize. Typical cap rates now range from below 5.0% in prime locations to around 6.75% in emerging markets. Recent significant portfolio sales have settled around the 5.0% to 5.5% range, reflecting confidence in the sector’s fundamentals despite broader economic uncertainties. Notably, the Centurion transaction’s price tag of $471,000 per bed is considerably above Sydney’s average of $325,000 to $388,000.
Active Offshore Investment
Singaporean investor groups remain particularly engaged in the Australian student accommodation market, facilitated by sovereign wealth funds and real estate investment trusts. European pension funds are also ramping up investments in PBSA, seeing it as a defensive asset class with counter-cyclical performance during volatile economic periods. The relatively immature state of Australia’s market compared to other developed nations presents an appealing entry point for these knowledgeable offshore entities.
Expanded Development Pipeline
In response to this capital influx, the development pipeline for student accommodation in Australia has seen significant growth. The latest Urbis Student Accommodation Benchmarks reveal that 40,000 beds are currently in various stages of development, progressively increasing from 36,000 in early 2025. This expansion aligns with the Australian Government’s policies linking international student visa allocations to increased access to student accommodation.
Regional Development Dynamics
New South Wales currently leads the development pipeline with 9,900 beds, followed closely by Victoria with 9,200 beds—though most of Victoria’s projects are still awaiting approval. Notably, Queensland is emerging as a competitive player, boasting 8,800 beds in the pipeline and experiencing impressive growth in student numbers and investment activity. South Australia has also made strides, particularly within inner Adelaide, where a surge of 2,600 approvals was recorded last quarter. Meanwhile, Perth has seen increased interest in development with 6,500 beds now planned, a reflection of Western Australia’s favorable investment environment.
Shifting Student Demographics
The source composition of international students arriving in Australia has evolved, further boosting investment demand. India has emerged as the fastest-growing market, while traditional contributors like China, though significant, have plateaued. Southeast Asian nations—such as Vietnam, Malaysia, and Indonesia—show robust growth spurred by Australia’s geographic proximity and stable political climate. Recent U.S. immigration policy changes have redirected interest from students choosing Australian institutions over American ones, especially as Australian universities continue to improve their global rankings.
Supportive Policy Environment
The Australian Government’s shift toward “high priority” and “standard priority” visa categories has replaced previous attempts to cap student numbers, thus maintaining robust enrolment flows. This is also encouraging students to explore regional and smaller universities, gradually redistributing the geographic concentration of international students away from the traditional strongholds of Sydney and Melbourne.
Meeting Student Needs
As the market matures and competition for assets intensifies, understanding student preferences for purpose-built accommodation has become critical. Research indicates that affordability is the foremost consideration for most students, followed by location proximity and specific amenities. Features such as reliable internet, laundry facilities, and robust security are essential, while kitchen facilities rank highly among international students who value the ability to prepare culturally aligned meals. Striking a balance between privacy and communal spaces is crucial to prevent isolation while fostering social interaction.
Continued Growth Trajectory
Looking ahead, the sector’s growth trajectory seems strong, with approximately 7,500 new completions projected for 2027. Even with this expanded supply, the underlying mismatch between suitable housing and the growing student population is likely to persist, driving ongoing investor interest. The market’s appeal extends beyond international students; many providers report that over 50% of occupancy is from domestic students, reflecting the broader housing affordability crisis. As Australia’s universities maintain their momentum in global rankings and international student numbers remain robust, the PBSA market is poised to attract further institutional capital well into 2026 and beyond.
The combination of favorable government policies, persistent undersupply, and robust investment characteristics makes Australian student housing an increasingly attractive opportunity for global institutional investors.