A structurally under-supplied market
According to a report published in August 2026 (available for download here) by CBRE Research, Australia counted 750,000 international students enrolled in higher education, vocational training and language programmes at the start of 2026. Nearly one in three students at Australian universities is now international, one of the highest proportions anywhere in the world.
Against this student base, the penetration rate of purpose-built student accommodation (PBSA) does not exceed 7% in Australia. By comparison, it reaches 45% in the United Kingdom and 29% in the United States, against just 8% in Germany and France, where CBRE had already documented tensions in the student housing market. The country currently offers one bed for every fifteen students, a ratio well below mature markets, where coverage reaches one bed for every two or three students.
A national shortfall estimated at 185,000 beds
CBRE estimates the gap between potential demand for student housing and the currently available stock at around 185,000 beds nationwide. This figure assumes that all relevant students could access suitable accommodation, which is not currently the case given the existing stock.
Two examples illustrate the scale of the imbalance. Around the University of Melbourne and RMIT, 70,000 students are actively seeking rental accommodation, while student residences and university colleges nearby offer only 26,500 beds. CBRE puts the unmet shortfall at around 10,000 beds in the Melbourne CBD and Inner North area alone.
In Sydney, the catchment formed by the University of Sydney and UTS numbers 68,000 students seeking accommodation, against 13,400 beds available in residences or colleges in the immediate vicinity. The unmet shortfall there reaches around 25,000 beds across the inner city and inner west, according to the same methodology.
A 34,000-bed pipeline concentrated in three cities
By 2029, CBRE records around 34,000 new beds in the pipeline nationally, representing an increase of roughly a third on current operating stock should all schemes proceed. Melbourne accounts for 28% of this pipeline, followed by Perth with 22% and Sydney with 20%.
Schemes identified include, in Sydney, Avenor’s project in Kensington (660 beds) and Scape’s development at Blackwattle Bay (580 beds). In Melbourne, Sime Darby is planning 900 beds in the Queens Street precinct, while Hickory and MaxCap are developing 890 beds in the CBD. In Perth, Mapletree and the University of Western Australia are each carrying schemes of more than 800 beds. In Adelaide, Brookfield and Trinity Church are among the most active developers, with schemes exceeding a thousand beds.
Despite this volume of development, CBRE expects the penetration rate to rise only modestly, to around 9% of students by 2029. The structural gap between supply and demand is therefore expected to persist throughout the decade.
Five operators control 70% of the market
The sector remains concentrated around a small number of players. UniLodge, the country’s leading operator, manages 33,000 beds across 118 properties, with a particularly strong presence in Adelaide, Brisbane, Canberra and Melbourne. Scape operates more than 20,000 beds across 41 buildings in Sydney, Melbourne, Brisbane and Adelaide, with further units in development.
Iglu has 5,900 operational beds across 14 properties, complemented by a further 2,900 beds in the pipeline, while Campus Living Village operates 5,000 beds across 8 residences, generally located on campus itself. Between them, the top five operators account for close to 70% of the sector’s total capacity, a configuration reminiscent of the gradual consolidation seen in Europe, where institutional platforms such as The Boost Society are similarly consolidating the student housing and coliving segments.
Rents on a continuous upward trend since 2022
The median rent for student residence studios in Sydney and Melbourne rose at a compound annual growth rate of 5.0% between 2018 and 2026. Nearly a quarter of the sample of standard studios now commands a weekly rent above AUD 700 (around €428), up from just 4% in 2023.
Rent levels vary considerably by city. In Adelaide, Canberra and Perth, older stock lets for between AUD 300 and 400 a week (around €184 to €245), a figure that can double for newer residences. In Brisbane, rents typically sit between AUD 500 and 600 (€306 to €367), against AUD 550 to 650 in Melbourne (€337 to €398) and AUD 700 to 900 in Sydney (€428 to €551).
By mid-2026, student residence rents carried a 12% premium over two-bedroom apartment rents in the same neighbourhood, a gap CBRE attributes to the services included in the PBSA offering: utilities, security, communal areas and resident support.
Stable capitalisation rates, with compression expected
Capitalisation rates for PBSA assets have remained broadly stable over the past eighteen months. CBRE places current indicative ranges at between 4.75% and 5.00% in Sydney, 5.00% and 5.25% in Melbourne, 5.25% and 5.75% in Brisbane, and 6.00% to 6.50% in both Perth and Adelaide.
Between 2021 and 2025, the market saw compression of around 50 basis points despite rising bond yields. CBRE now anticipates bond yields easing by around 40 basis points by 2030, which could bring about a moderate tightening of capitalisation rates over the period.
New Zealand follows a comparable trajectory
The New Zealand market confirms the regional trend. International student enrolments rose 14% between 2024 and 2025, with China remaining the top source market despite a slight decline in its relative share. Auckland accounts for around 40% of the country’s university student population.
The country’s largest student residence project is currently under construction at 22 Stanley Street, comprising 964 units and due to open in 2028. The same developer, Precinct, is also developing 638 units at 256 Queen Street, with completion planned for 2029.
A segment drawing hotel investors’ attention
For asset managers and investment funds active in hospitality, this structural imbalance fits within a broader trend of diversification into operated residential sectors. In Australia itself, investment groups such as Salter Brothers are already developing hotel asset repositioning strategies built around value creation rather than new capacity, an approach that the scarcity of student supply makes transferable to the PBSA segment. CBRE’s report also confirms that the “operated living” asset class continues to attract institutional capital even as the outlook for the traditional hotel market normalises following several years of strong post-pandemic recovery.
At a glance by The Hospitality Tribune
Australian PBSA market, key figures (CBRE Research, August 2026):
National shortfall estimated at ~185,000 beds versus potential student demand
Current PBSA penetration rate: 7% of students, versus 45% in the UK and 29% in the US
~34,000 new beds forecast 2026-2029, a third uplift to current stock if all projects proceed
Melbourne (28%), Perth (22%) and Sydney (20%) account for most of the pipeline
Median studio rents grew at a 5.0% CAGR (2018-2026) across Sydney and Melbourne
Indicative cap rates range from 4.75%-5.00% in Sydney to 6.00%-6.50% in Perth and Adelaide
