The Resurgence of Australia’s Education Sector: Opportunities in Student Accommodation

With enrolments exceeding 1.09 million international students in 2024—a notable 15% increase from pre-pandemic levels—Australia’s education sector has firmly re-established itself as a premier destination for global capital seeking stable returns in specialized residential assets.

A Landscape of Dominance

New South Wales and Victoria remain the frontrunners in the student accommodation landscape. In particular, Sydney and Melbourne universities are attracting the highest volumes of international enrolments. These two metropolitan hubs have always been popular, but their increase in student numbers highlights their global competitiveness.

However, Queensland is stepping into the spotlight as an increasingly attractive market. Brisbane particularly stands out, showcasing some of the strongest growth not only in student numbers but also in investments in purpose-built student accommodation (PBSA). This shift suggests a diversifying landscape where other cities are beginning to offer viable options for investors.

Market Dynamics and Property Values

Transaction data reveals that properties in Sydney command the highest values within the market, with Melbourne following closely. On the other hand, Brisbane, Adelaide, and Canberra are emerging as more accessible entry points for investors looking to tap into the growing student population.

Significant portfolio transactions have been noted in these five major university cities. Over the past 24 months, global institutional investors have led major acquisitions exceeding $2.3 billion, with portfolios changing hands at capitalization rates around 5% to 5.5%. This trend demonstrates the market’s robustness and continues to inspire investor confidence, even amid broader economic uncertainties.

Changing Composition of International Enrolments

The demographic composition of international student enrolments in Australia has shifted significantly, leading to new investment strategies in the PBSA sector. While traditional student-sending countries, such as China, continue to be significant contributors, India has emerged as the fastest-growing origin for international students.

Further growth is seen from Southeast Asian nations like Vietnam, Malaysia, and Indonesia. This surge can be attributed to Australia’s geographical proximity and the perception of it being a safer alternative compared to other destinations like the United States.

Policy Impact and Geographic Distribution

The Australian government’s shift in December 2024 to establish “high priority” and “standard priority” visa categories has encouraged strong enrolment flows and directed many international students toward regional and smaller universities. This policy change is reshaping the geographic distribution of international students across the country, creating varied opportunities for investors.

Academic Excellence and Global Rankings

Australia’s universities continue to make notable gains in global rankings across several disciplines, further enhancing the country’s appeal. Engineering and technology programs in New South Wales and Victoria are showing particular improvement, while natural sciences and business studies at Queensland universities have climbed significantly in subject-specific rankings.

Institutions like the University of Melbourne, Australian National University, and the University of Sydney lead the pack, but improvements from universities in Western Australia and South Australia are broadening appeal beyond the traditional markets. This diversity attracts a range of prospective investors looking for opportunities beyond the East Coast.

Geopolitical Shifts and Australia’s Appeal

Rising geopolitical tensions have highlighted Australia as a prime beneficiary in the global race for international students. Restrictive visa policies and political uncertainties in the United States have redirected student flows toward Australia, especially from India and Southeast Asia.

Australia’s relative political stability, transparent visa processes, and favorable post-study work opportunities create compelling advantages. The recent shifts in U.S. immigration policy, particularly post-2024 election, have further accelerated this trend, drawing interest from students who may have previously favored American universities.

Investment Opportunities in an Evolving Market

The Australian student housing market remains relatively underdeveloped compared to more mature markets like the UK and the US. This underdevelopment presents an attractive entry point for experienced offshore investors who can leverage their operational expertise.

In particular, Singaporean investors, along with European pension funds, have been highly active, viewing Australian student housing as a defensive asset class amid global economic uncertainty. Their increasing allocations reflect a growing recognition of the stability and returns available in this sector.

Regional Investment Attention

While capital cities continue to attract the majority of investment, regional universities in New South Wales, Victoria, and Queensland are garnering increased attention from developers and investors. The government’s visa prioritization for regional institutions has improved investment viability in areas previously overlooked.

Regions such as Newcastle, Wollongong, Geelong, and the Gold Coast have seen stronger international enrolment growth compared to metropolitan institutions, albeit starting from lower levels. This geographic diversification provides opportunities for investors searching for higher yields beyond crowded urban markets.

Currency Position and Education Affordability

The Australian dollar’s competitive position against major currencies enhances the country’s value proposition for international education. Tuition and living costs have become more affordable for students compared to North America and the UK, making Australia an even more appealing choice.

Despite the nation’s housing challenges, Australia’s high-quality education offerings continue to draw considerable interest from international students. This growing appeal serves to reinforce investor confidence in the PBSA sector.

A Bright Future Ahead

As Australia’s education sector anticipates continued growth through 2025 and beyond, the student accommodation market stands as an enticing prospect for both domestic funds and international investing groups. With universities rising in global rankings and international student numbers reaching unprecedented levels, the specialized student housing sector is maturing into an institutional-grade asset class. This evolution is increasingly drawing sophisticated real estate investors, keen to capitalize on the burgeoning opportunities within this vital sector.