A decline in international students, including those from China, has forced the owners of student accommodation in Australia to turn their properties into residential or co-living flats, analysts said.
Last year, with borders closed, international students enrolling in Australian educational institutions declined 9 per cent to 686,104, with 28 per cent coming from China, followed by 17 per cent from India, according to data from the Australian government. As of March, there were 512,855 students, 17 per cent fewer than a year ago.
“Purpose-built student accommodation [PBSA], hostels and backpacker properties have been impacted the most by the decrease in international students. The annual influx of international students into these properties has been virtually zero, upon the closure of Australian borders,” said Raymond Tran, director, CBRE Hotels. “On the development front, there has been a slight shift with some previously proposed hotel, residential or PBSA developments now being converted into co-living or build-to-rent schemes.”
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The owners of student accommodation are likely to feel the pinch – Australia is the world’s third-largest provider of international education with international students accounting for more than one in three at its top universities, according to government officials. The sector added A$37.5 billion (US$28 billion) to the economy in 2020, with 60 per cent going toward housing, food, transport and tourism. The segment is also estimated to have supported 250,000 jobs.
A decline in enrolments is likely to shrink Australia’s international education sector by almost half, from A$40.3 billion in 2019 to A$20.5 billion in 2022, according to a study published in April by Melbourne-based Victoria University’s Mitchell Institute for Education and Health Policy.
“By July of next year, the number of international students living in Australia is likely to have fallen by more than two-thirds,” said Georg Chmiel, founder and executive chairman of Asian real estate platform Juwai IQI. “From about 500,000 in April 2020 to only about 165,000. More than 335,000 students who would have been living in some sort of housing here in Australia will probably be missing.”
This absence will also mean cheaper rents. Each landlord in Melbourne is estimated to be losing A$5,000 a year, and A$2,200 in Sydney, Chmiel said. Rents in Sydney and Melbourne declined between 8.8 per cent and 20 per cent from a year ago in June, according to Sydney-based investment research house SQM Research. Asking prices fell between 8.1 per cent and 9.8 per cent, respectively.
Worsening relations between China and Australia present an additional risk for owners of student accommodation. “The pandemic presents unprecedented challenges and difficulties for foreign students studying and living in Australia, given the lockdowns and border closures, as well as the political tensions between China and Australia,” said Maggie Hu, associate professor of finance and real estate at the Chinese University of Hong Kong. “The tensions will also be a major dampening factor.”
Chinese students would be worried about a potentially hostile environment if the rift worsens and anti-China sentiments become more prevalent in Australia, Hu said.
While geopolitical tensions may have played a part, travel restrictions were, however, more likely to be the reason for a decline in Chinese students in Australia, said Peter Hurley, education policy fellow at the Mitchell Institute.
The decline in the number of international students was likely to “occur not because of geopolitical tensions but because the Australian government has made clear they do not expect borders to reopen until July 2022”, Hurley said. “This will result in many international students deciding not to study at an Australian institution and to look elsewhere to study.”
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This article China-Australia relations: student housing sector Down Under hit by border closure, rift with Beijing first appeared on South China Morning Post