Goldman Sachs invests in Aussie student housing market

WHERE WILL THE STUDENTS SLEEP? Australia's booming education sector has enjoyed an influx of students from Asia. However, the growth in the number of student beds has not quite kept pace.


    Apr 06, 2016

    Goldman Sachs invests in Aussie student housing market


    AUSTRALIA'S student housing market is shaping up to be the next big thing as an influx of foreign scholars entices investors into a neglected sector, reinvigorating a home building boom that is providing vital support to the wider economy.

    An English-speaking country at the doorstep of Asia and offering an enviable quality of life, Australia now sits with the United States and Britain as a top destination for foreign students.

    Goldman Sachs has seen the potential in student housing, partnering with investor Blue Sky to launch an A$1 billion (S$1.03 billion) fund to invest in the sector.

    "The expanding Asian middle class story is a big one for our market," said Adam Vaggelas, director and head of real estate investing at Blue Sky Private Real Estate, a subsidiary of Blue Sky Alternative Investments.

    The sector could help underpin Australia's home building boom, which is coming off the boil as red-hot property prices start to cool.

    Highlighting its growing clout in the wider economy, construction was a major driver of growth in the fourth quarter, helping offset a big drag from a mining downturn.

    The numbers of students who need to find housing in Australia add up rather nicely, jumping by 10 per cent in 2015 from 2014, to nearly half a million, led by students from China and India.

    Yet, a national census of university student accommodation providers, the University Colleges Australia, showed the country had fewer than 80,000 student beds as at November 2014.

    International estate agent Savills said growth in number of student beds provided has been a glacial 4.3 per cent over the 15 years to 2014.

    It is expected to pick up to an annual rate of 4.7 per cent by 2018 but that is still well off the number of beds needed.

    "Undersupplied, the sector offers significant potential," Savills said.

    It noted that development will be focused on the major cities of Melbourne and Sydney, in which most of the big universities are located.