The Covid-19 pandemic has taken a harsh toll on Australia’s student accommodation market, as providers report occupancy falls of between 20% and 50%, according to property consultancy Savills, which anticipates negative growth in the third quarter.
An effective shutdown of Australia’s borders in mid-March and repatriation of international students to their home countries triggered a decline in occupancy across most student accommodation facilities, irrespective of city, Savills said in a new report.
The fall in occupancy recorded by student accommodation providers was “in line” with most current economic forecasts, the firm said, noting that only 30 people came to Australia on temporary student visas last month – a 99.9% decline on the same period of last year.
A contraction in Australia’s A$40 billion (£21 billion) international student market – income from which will “decline sharply”, according to Savills – upended record occupancy levels recorded by purpose-built student accommodation (PBSA) providers in September 2019, before the coronavirus crisis struck.
This will result in negative growth for the first time in seven years, said Savills: “With the March quarter historically the largest quarter in revenue terms, by Q320, we expect the data to show negative annual growth for the first time since 2013.”
In the decade running up to the Covid-19 outbreak, the Australian student accommodation market, driven by robust liquidity, global investment and double-digit growth in international student numbers, had begun to reach a point of “early maturity”, according to Savills. Some A$3 billion was expected to be invested in the sector this year, up from A$1.8 billion in 2019, Savills said.
But government-enforced travel bans prevented foreign students – the largest cohort of which were Chinese – from returning to university studies in Australia. Meanwhile, many international students who had offers in place or were considering studying Down Under deferred enrolling or cancelled their study-abroad plans altogether, prompting expectations of multimillion-dollar deficits at some of the country’s largest institutions.
On 8 May, the government announced the possibility of chartered flights to facilitate the return of international students to Australia in the second term, or by the start of the 2021 academic year at the latest.
The country’s approach to releasing restrictions on flows of international students could give PBSA providers the opportunity to “recharge occupancy”, Savills said.
“First-mover advantage will be key to the recovery, and for the resilience of the sector over the short to medium term,” its report stated. “International education agents are watching to see which countries relax travel restrictions first, before they restart recommending study opportunities in global destinations.”
Savills noted the student accommodation sector’s ability to weather economic downturns, amid forecasts that global GDP will shrink by 3.2% as a result of the pandemic.
“Although no data for Australia, as the country continues, for now, to skid above the recession surface having had 28 years of uninterrupted economic growth, student accommodation has proven to be resilient and less cyclical in performance in competitor markets,” Savills said.
Date published: 19 May 2020