News - 25th February 2016 - (The Australian)
Acquisitions: A new player in the student accommodation sector has ambitious plans to be managing 25,000 beds within 10 years via a mix of new developments and takeovers.
Simon Loverage, managing director of GSA Group Asia Pacific, said the company’s re-entry into the Australian market was based on healthy projections for ongoing growth in international student numbers and more domestic students moving away from home to study.
“There is a continuing trend of global mobility of students and with the increasing commercialisation of universities, we will see that continuing,” Mr Loverage said.
“From a real estate perspective we’ve seen a real emergence of the asset class both in the UK and the US last year,” Mr Loverage said. “There were around £8 billion ($15.5bn) in transactions in the UK last year. We see the same opportunity here. It’s massively undersupplied relative to both domestic and international student markets.
“We see that Australia has all of the market fundamentals to develop into a more institutional grade asset class given the world leading universities, real estate market and the large and growing international student population.”
Mr Loverage said the undersupply of purpose-built student accommodation represented only 10 per cent of the total student accommodation market, despite an increasing number of operators entering the market.
Mr Loverage said demand was likely to outstrip demand for the foreseeable future, as international student numbers hit record highs. In 2015, the sector contributed $19.2bn to the economy, to be the third biggest export industry after iron ore and coal.
In 2015, there were 640,000 international students in Australia, including 272,000 studying at higher education institutions. GSA has its sights on sites in Sydney, Melbourne, Brisbane and Adelaide, but also has Auckland and Canberra on its radar.
GSA has previously been in the Australian student accommodation market after successfully launching the company Urbanest in 2007. It sold the company last year after building a portfolio of 4000 beds in Sydney, Melbourne, Brisbane and Adelaide.
Mr Loverage agreed that 25,000 beds across Australia and New Zealand was an ambitious target, but said it would be achieved through a mix of new developments and takeovers.
“Proportionally, its not a huge amount but relative to the other players in the market, it’s quite a big scale,” he said. “That number is not all organic development; we will be acquiring existing assets over time. It would be almost impossible to organically grow to that scale.”
Mr Loverage said the company worked closely with universities, but GSA’s business model was not dependent on formal agreements.