Paul Savitz - Knight Frank
29
BRISBANE Where has the student market come from and where is it going? 29th November 2016
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Transcript of Paul Savitz - Knight Frank
BRISBANE
Where has the student market come from and where is it going?
29th November 2016
2
Introduction & Past Experience
PAULSAVITZDirector
Research&Consul;ng
8+yearsexperienceinresearchingpurpose
builtstudentaccommoda;on
(PBSA)marketsacrosstheUK,Europeand
Australia
SupplyandDemandAssessments Valua;onSupport
StudentExperienceandNeedSurveys
ResearchReports&WhitePapers
3
Knight Frank - Global
4
Knight Frank - Local
5
Agenda
§ Current Demand & Supply Imbalance
§ Future Demand & Supply – Growth?
§ Importance of PBSA § PBSA Sector Investment & Development
§ Outlook
6
Student numbers trending up
Source: Knight Frank Research, Department of Education and Training (full time students)
§ Theposi)onlastyearshowingsolidannualgrowthfrom2001onwards
7
Student numbers trending up
Source: Knight Frank Research, Department of Education and Training (full time students)
§ 1,000,373studentsenrolledonafull)mebasis,up2.8%from972,336in2014
§ Thenumberoffull;meinterna;onalstudentsenrolledatAustralianHigherEduca;onIns;tu;onshasshownposi;vegrowth(5.5%)forthethirdconsecu;veyear
§ Adeprecia)onoftheAustralianDollar,growinginterna)onalrecruitmentpolicies,highlyrankeduniversi)es,increasingconfidenceinstudentsafety,andthesimplifica)onofstudentvisaapplica)onshavefacilitatedthisreturninggrowth
8
International students at record levels
Source: Knight Frank Research, Department of Education and Training (full time students)
§ Theposi)onlastyearshowingsolidannualgrowthsince2012
9
International students at record levels
Source: Knight Frank Research, Department of Education and Training (full time students)
§ 15yearaverage=29.6%ofallfull)mestudents
§ 2015recorded30.9%§ Interna)onalstudentshavegrownby
165%since2001,from116,304toanewpeakof308,704in2015
§ 40,834moreinterna)onalstudentsthanin2012
Whyareinterna;onalstudentsimportant?
§ 1)Theypayhighertui)onfeesthandomes)cstudents
§ 2)Morelikelytorequireaccommoda)onasonthewholetheydonothaveaccesstoadomes)cresidence
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And the economic benefits are huge
Source: Knight Frank Research, ABS
§ Australia'sannualeduca)onexports(interna)onalstudents)soaredtoanewhighof$21bn
§ 27%ofeduca)onexportrevenuewasfromChinesestudentsinyeartoSeptember2016
§ Overtwo-thirdsofeduca)onexportearningsgotoNSWandVictoria,withQueenslandearning15%,WA7%andSAonly5%
§ Studentsinhighereduca)onsupply70%ofeduca)onexportearnings
11
Demand is growing…
Source: Knight Frank Research, Department of Education and Training (full time students)
§ 79%ofinterna)onalstudentslocatedacrossNSW,VICandQLD
§ BothNSW&Vicrecordedannualgrowthinoverseasfull;mestudentsthispastyearof8.3%and7.6%respec;vely
§ Qldactuallyrecordeda1.0%fall
EasternSeaboardarethelargestmarketsfor
interna;onalstudentsandisalsowheregrowthhasbeen
strongest
November 2016
12
However… supply doesn’t add up
Source: Knight Frank Research
§ KnightFrank’sanalysisofPBSAacrossAustraliaindicatesafigurecloseto92,143
§ Takesintoconsidera)onthecomple)onof5,611PBSAbedspaceswhichbecameopera)onalin2015and4,593newbedsin2016
§ TheEasternSeaboardstatesofQueensland,NewSouthWalesandVictoriaaccountforover78%ofallPBSAbedspaces
14,921
33,172
23,450 National: 92,143
5,933
965
4,720
7,469
1,513
Growthinstudentnumbershashistoricallyoutweighed
thegrowthinPBSA
11.6 / 3.0
8.9 / 2.5
12.4 / 4.9
16.6 / 4.9
6.4 / 2.2
14.3 / 3.7
3.1 / 1.2
11.7 / 3.1
November 2016
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Student to bed ratio
Source: Knight Frank Research, Department of Education and Training
§ 1PBSAbedspaceforevery3.4FTinterna;onalHEstudentsna;onally
Highlightstheacutenessoftheshortageinstudentaccommoda;on
National: for every 1 PBSA bedspace there are
10.9 FT HE students
Cambridge = 1.9
Edinburgh = 3.2
Newcastle = 3.0
4.3 = Glasgow
Sheffield = 2.7
Nottingham = 2.5
London = 3.3
Southampton = 3.0
1.6 = Oxford
York = 4.0 Leeds = 2.5
Leicester = 2.2
2.8 = Bristol
September 2016
14
Placing those figures into context…
Source: Knight Frank Research, HESA
Perth
Highlightsthematurityof,and
accessibilityof,thestudent
accommoda;onmarketinother
na;ons
Na;onssuchastheUKcompetewithAustraliafortherecruitmentof
interna;onalstudents
§ TheUKPBSAmarkethasnowmaturedintoasectorwherethetransac)onofassetsandlandhasaveragedover£5bnoverthepasttwoyears
3.0 = Manchester 2.3 = Liverpool
3.1 = Birmingham
November 2016
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Future supply pipeline is increasing…
Source: Knight Frank Research
§ Greaterinterest&knowledgeofthesector–anunderstandingofundersupplylevels
§ KnightFrankes)matethat36,675PBSAbedspaceshavethepoten)altobecomeopera)onalbytheendof2021
§ IfallisbuiltmajorityofnewstockwillbedeliveredacrossSydney(12%),Melbourne(24%)andBrisbane(31%)
§ Currently11,478PBSAbedspacesintheBrisbanesupplypipeline–Doubledoverthepast18months
§ TheCityCouncilhasadaptedplanningregula)onstoallowforreduceddevelopercontribu)onsonsiteswhichfallwithinspecifiedparameters
13,760
6,086
9,161 National: 36,675
3,365
0
1,967
1,796
540
…pipelineto2021
16
Delivery of new PBSA bedspaces to peak in 2019…
Source: Knight Frank Research
§ Withsignificantstudentaccommoda)ondevelopmenteitherplannedorunderwaythroughoutAustralia,comparedwithhistoricdevelopmentlevels,aninferiorschemewillquicklyprovetobeanunviableasset
§ CurrentlyasaresultoflimitedsupplyofqualityPBSA,AustralianIns;tu;onsarereliantontheprivaterentedresiden;almarkettowhichtheyhavenocontrol
§ Goingforwardthiscouldimpactontheirabilitytorecruitthebeststudents,nega;velyimpac;ngtheirposi;ons,andreputa;ons,inworldeduca;onrankings
November 2016
…andcompe;;onamongstoperatorswillincrease
17
Residential supply has increased but…..
Source: Knight Frank Research, Residex, REINSW
…rentalgrowthiss;llrisinginthethreebiggeststudentci;es–albeitmoreslowly
§ Vacancyindicatorsshowthatthereisroomforrentstogrowfurtherastotalvacancyremainsbelowthe3%equilibrium
§ GoodnewsforPBSAdevelopers,operatorsandinvestors
§ Latentdemand
§ Rentalpicturenotposi)veeverywhere–Perthfalling
§ PBSAappearstobealowriskinvestment…ifyougetitright!
September 2016
18
Domestic population Growth will drive demand
Source: Knight Frank Research, ABS
§ Indica;onsarethatdemandforHigherEduca;onplaceswillcon;nuetorise,asthekeystudentdemographic(18-22yearolds)con;nuesitsupwardgrowthtrend
§ Theincreasein18-22yearolds,projectedatanaveragegrowthof0.6%perannumoverthenext10years,or83,415inabsolutenumbertermswillunderwritesignificantexpansioninAustralianHigherEduca;onprovision
19
Global student mobility to increase
Source: Knight Frank Research, OECD, Böhm et al 2003
§ Educa)onisanincreasinglyglobalmarketplace
§ Thenumberofstudentsahendinguniversityoutsidetheirowncountryisforecasttomorethandoubleby2025
§ AnopportunityforAustralianHigherEduca)onIns)tu)onstoincreasetheirstudentintake–alreadyoneofthehighestrecipientsofinterna)onalstudentsalongsideUS,Canada&UK
§ Andanopportunityfordevelopersandinvestorsintostudentaccommoda;on
20
All leading to a continued increase in mobile students
Source: Knight Frank Research, UCA
§ Mobile,highereduca)onstudentsarecountedasthesumofdomes)cfull-)meinterstatestudentsplusdomes)cfull-)meintrastatestudentswhomustleavehometoajendtheirchosenuniversityplusonshorefull-)meinterna)onalstudents
§ Therewasanincreaseof47%inthenumberofmobilehighereduca)onstudentsovertheperiod2004throughto2013
§ Equatestoa4.4%compoundannualgrowthrateoverthesameperiod
21
And a need for more accommodation
Source: Knight Frank Research, UCA 2014 Census Report
§ Usingpastgrowthtrendsofmobilestudentstoes;matefuturegrowth,by2024,therecouldbeover500,000mobilestudentsinAustralia
§ Withoutasignificantincreaseinpurposebuiltstudentaccommoda;onwherewillthesestudentslive?
§ Thisisanincreasinglyimportantissueas…
22
affordability decereases
Source: Knight Frank Research, Department of Education & Training: International Student Survey 2014
§ Sa)sfac)onwithAustralianaccommoda)oncostsaccordingtotheInterna)onalStudentSurvey2014hasdecreased:
§ 2010=60%sa;sfac;on
§ 2012=51%sa;sfac;on
§ 2014=49%sa;sfac;on
§ Thesedecliningsa)sfac)onlevelscouldbereflec)veofthecostoflivinginAustraliacomparedwithhomecountriesforinterna)onalstudents
§ Orchangingexchangerates
§ Butlikelytobebecauseofincreasingrents–aresultoflimitedsupply&growingdemand
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And students are now demanding more
Source: Knight Frank Research, Unite Students
§ UniteGroup–50,000studentbedspaces,140proper)es&afurther7,000inthedevelopmentpipeline
§ Applicantsincreasinglyseeaccommoda;on-andthequalityofaccommoda;on-asabigdrawforapplyingtoapar;cularuniversity
§ “THERISEOFTHESTUDENTASACONSUMER”
§ In2014aquarterofApplicantsconsidered‘goodqualityaccommoda;on’animportantfactorforchoosingauniversity.Thatrosetooverathird(35%)in2015.
§ MorethanafiqhofApplicants(22%)saytheaccommoda;ononofferisoneoftheirtopthreereasonsfortheirchoiceofuniversity.Both‘academicsupport’and‘agreatnightlife’werebeatentothespot
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Services & location most important
Source: Knight Frank Research, Unite Students
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investors are recognising the opportunity
25 Source: Knight Frank Research
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Investors are circling
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§ GrowingknowledgeofundersupplyandthePBSAsector
fundamentals
§ HigherEduca;onins;tu;onstoconcentratemajorityoffundson
researchandteaching–notonprovingaccommoda;on
§ Lowriskinvestment–latentdemand
§ Demandforalterna;veinvestmentassets–bothdomes;cally
andglobally
§ LowinterestratesandfallingcostofdebtmakeAustralianreal
estateyieldahrac;veandastableinvestment
§ Planning&developmentencouragement&support(Brisbane)
27
Outlook for the PBSA Sector
29
Disclaimer
© Knight Frank Australia Pty Ltd 2016 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank Australia Pty Ltd for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank Australia Pty Ltd in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank Australia Pty Ltd to the form and content within which it appears.
This document may contain information supplied to Knight Frank by third parties that may not have been validated and Knight Frank cannot accept liability for conclusions based upon such information. This document may not be passed onto, or be used in any way by, any third party. The research presentation should not be relied on by the nominated party/parties for any other purpose and has been prepared by Knight Frank independently of Informa or the Purpose Built Student Accommodation Forum 2016 and its related parties.
