Add value to your Sydney fringe commercial property: student accommodation

By Kristian Morris

Much talked about but little understood by property owners with property on the fringe of Sydney, student accommodation can boost your property value. In this article, I explain what it is, who it’s for, why you might consider going in this direction and how to manage the result.

What is student accommodation Sydney?

Student accommodation can be either a boarding-house-style arrangement with individual bedrooms with shared kitchen and bathroom facilities or separate units (usually studios) with kitchenettes and bathroom facilities. Accommodation for university students is in high demand as international students return to the University of Sydney, the University of Technology Sydney and Notre Dame University after the pandemic.

Demand for student accommodation in Sydney

According to The Sydney Morning Herald, ‘Student accommodation is in crisis mode as the number of new visas being issued far outweigh the chronic level of low supply of available beds …’. This chronic shortage of beds is an opportunity for owners of property in university accommodation precincts such as Glebe, Forest Lodge, Ultimo, Camperdown, Surry Hills and other city fringe suburbs.

Student accommodation as an asset class

In recent years, student accommodation has emerged as a distinct asset class, with investors choosing this asset class because of superior returns ‒ higher than the much-talked-about build-to-rent model.

Education in Australia is one of the top four industries for output and earnings. Mining (14.6%) leads the charge followed by Finance (7.6%), Health and Education (13.0%), Manufacturing (5.8%) and Construction (7.3%). As an indicator, education in 2022 contributed $29 billion to our economy.

Overseas investors in particular see the value in investing in a stable economy, well-regulated property market and an asset with high demand. The appeal of student accommodation lies in the crossover between commercial and residential in that it behaves like commercial property for yield but has exposure to the residential market.

Converting Sydney city fringe property to student residential

Converting your property to student accommodation is a classic adaptive reuse scenario. Office buildings are often converted to residential units; warehouses already converted to office and consultancy space can, with a bit of planning and a good architect, be converted into student accommodation.

How universities register student accommodation

This step varies from institution to institution. Your best bet is to get in touch with the accommodation co-ordinators from the universities. Note that universities and colleges will prefer accommodation where you or the property manager has a plan to create and maintain a sense of community.

Case study: Darlington boarding house

On our books at the moment is 325 Abercrombie St Darlington, a completely fitted-out property suitable for use as student accommodation. The property is ideally located in the hub for University of Technology Sydney, Technology Park, University of Notre Dame and Sydney University, with close to transport links to the Sydney CBD. Individual flatettes, metered separately, have private bathrooms and kitchenettes plus laundry facilities. Current income on this property is $165,000 a year.

Let us help you with your commercial property

As dedicated local commercial real estate agents, we can help you extract more value from your commercial property. Please get in touch to discuss your circumstances and assets so we can give you personalised advice. Whether it’s commercial leasing, management or sales, we’re here to help you with your Sydney-based commercial property.

Contact us at Ray White Commercial Sydney City Fringe

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