The recent sale of a State Development Corporation / White & Partners project at 611 Coronation Drive for $13.5m to a student housing operator further underlined the increasing significance of this sector of the market.
The sale price was a significant premium to the value of the property as a traditional residential development site, and delivered a significant premium to the purchase price of $5.1m in October 2013.
Located in the bustling hub of Toowong, 4km south west of the Brisbane CBD, the strategy was to carry out a modest refurbishment of the office building and lease the property while pursuing a DA to redevelop the property into a mixed use development. Final development approval was achieved in February 2016 for 162 apartments and the property was subsequently revalued at $9.5 million, an 86% increase in capital value.
Just as the pre-sale marketing for the apartments was set to commence in May 2016, we were approached by a number of student housing operators (SHO) who were attracted to the property due to its location, amenity and close proximity to QLD University.
Education is Australia’s third largest export, with over 450,000 international students contributing $16.3 billion to the Australian economy annually.
The number of students showed year on year growth of 10.4% with the three largest student markets being Sydney (95,618 students), Melbourne (96,174 students) and Brisbane (60,032 students). According to data published by the National Census of Student accommodation (NCSA) there is a shortfall in student accommodation of 78% in Sydney, 76% in Melbourne and 61% in Brisbane.
After a number of bids, Scape Australia was the successful purchaser, and the sale price represented $8,132/sqm based on NLA or $83,333 per approved apartment. These metrics are far stronger than those for residential apartment developments, especially considering the risks associated with undertaking the development in an increasingly unpredictable Brisbane apartment market.