Investor demand for purpose-built student accommodation (PBSA) has surged in 2025, with transaction volumes hitting $1.8 billion across four deals—a dramatic leap from the $116 million recorded in 2024, according to Knight Frank’s Australia PBSA Update Q2 2025.
The standout deal so far is Greystar’s $1.6bn acquisition of a joint portfolio from GIC and Wee Hur, comprising 5,662 beds across seven assets. Even without this blockbuster transaction, 2025 volumes still significantly exceed last year’s total, Property Council reported.
Australia’s status as one of the world’s top education destinations—with consistently high international student enrolments—continues to underpin strong fundamentals for PBSA investment, despite recent government moves to cap student numbers and tighten visa rules.
Tim Holtsbaum (pictured left), Knight Frank’s head of alternatives, said PBSA investment volumes are expected to increase in the second half of the year as macroeconomic and political conditions improve.
“Last year, the lack of clarity around international student caps, coupled with a challenging macroeconomic backdrop resulted in a slowdown in the volume of transactional activity,” Holtsbaum said.
He noted that 2024 saw tightly held operational schemes, and those few assets that did come to market attracted competitive bids due to limited buyer opportunities.
“This year we have seen a resurgence in investor interest in the sector, with investors viewing it favourably due to its strong fundamentals, including the undersupply dynamics, student growth and counter-cyclical features, with the prospect of good risk-adjusted returns,” Holtsbaum said.
Looking ahead, Holtsbaum said upcoming changes could further fuel investor interest.
“We expect additional anticipated rate cuts and the prospect of greater political certainty in Australia in the second half of 2025 will lead to greater activity as the year progresses,” he said.
Investor sentiment remains bullish, especially among North American capital, following the largest deal announcement since Scape’s acquisition of Urbanest in 2020.
“Recent transactions have demonstrated that stabilised PBSA assets remain a key target for investors trying to enter or consolidate their position in the Australian market,” Holtsbaum said.
“However, given the limited opportunity to acquire standing investments, we expect to see investors exploring alternative transaction structures in order to deploy capital.”
Knight Frank chief economist Ben Burston (pictured right) highlighted the growing political support for the PBSA sector as it helps alleviate pressure on Australia’s broader rental housing market, Property Council reported.
“Sentiment among policymakers and stakeholders for the growth of PBSA is strengthening, as it is increasingly recognised for its role in supporting the growing student population while mitigating pressure on rental demand,” Burston said.
He noted that international student enrolments are now well above pre-pandemic levels, nearly double what they were a decade ago, helping maintain strong occupancy rates across PBSA assets.
“The student accommodation sector has experienced strong rental performance due to the demand-supply imbalance in the market, and the market is expected to remain undersupplied despite rising development activity,” Burston said.
Knight Frank’s data revealed sharp increases in PBSA rental rates since 2018, particularly for studio apartments:
Currently, 6,912 beds are under construction, with 2,772 beds expected for delivery this year—a 40% increase on 2024. Another 5,832 beds are due in 2026, further expanding capacity, though not enough to fully ease demand pressure.
A 2024 report by the Student Accommodation Council found that international students account for just 6% of the total rental market—reinforcing the value of purpose-built student accommodation in easing pressure without displacing local renters.
