While Melbourne has several high-profile PBSA developments in the pipeline, are these additional beds enough to keep up with a growing higher education sector amidst broader dwelling supply shortages?
Melbourne: A Metropolis for International Students
Melbourne continues to cement its global reputation as a premier destination for international students. Even after the disruption of COVID-19, Melbourne has welcomed back international students in large numbers. The city has held the title of Australia’s “best student city” by QS rankings since 2015 and is currently ranked 5th globally—behind only London, Tokyo, Seoul and Munich.
The long term strength of Melbourne’s education ecosystem is reflected in the PBSA sector, with the city accounting for 42% of Australia’s national PBSA bed supply. However, this is justified by a strong international student population with 8.67 students per PBSA bed - well above the national average of 7.27.
Unlike other Australian cities, Melbourne has a clearly defined student living and university precinct. The precinct is located at the Northern end of Melbourne’s CBD and sprawling into North Melbourne and Carlton, anchored by the urban campuses of University of Melbourne and RMIT which blend into Melbourne’s CBD and surrounding suburbs
This concentration of academic infrastructure and contemporary student accommodation has made Melbourne a preferred destination, not only for international learners but for operators and investors in student housing.
“Melbourne’s thriving centralized student precinct has long been recognised by investors and operators as a unique feature that supports the success of student accommodation assets,” says Noral Wild, CEO of Cushman & Wakefield Australia & New Zealand. “It’s not just the concentration of universities—it’s the vibrancy, connectivity and strong track record of underlying demand from international students that sets Melbourne apart.”
Scape is the largest owner and operator of PBSA real estate in Australia. On the Melbourne market, Scape’s Chief Executive Officer Anouk Darling is seeing “solid leasing velocity and consistent rental growth year on year across the Melbourne portfolio”. She comments that demand is further fuelled by Melbourne’s reputation as a global education hub, “a top choice among international students, seeking high quality, centrally located housing, preferring purpose built accommodation for its safety, amenities, and community environment.”
Do We Have Enough Supply?
While new developments are in the pipeline, questions remain about whether Melbourne’s PBSA supply can keep pace with demand as operators report high levels of occupancy and record rental rates. The city currently has ~700 beds under construction across three projects, with a further ~3,000 beds in earlier stages of development. In total, this represents just 8.2% of existing operational stock - a far slower development velocity compared to Sydney, where the pipeline represents 18.6% of current PBSA beds.
Despite Melbourne being Australia’s largest PBSA market, a significant gap still remains between the potential demand pool (number of mobile students) and supply (existing & pipeline PBSA beds plus on-campus beds). Cushman and Wakefield research estimates a potential shortfall of 200,000 appropriate student housing beds exists based off 2023 enrolment levels.
While full-year enrolment data for 2024 from the Department of Education is not yet available, early indicators show continued momentum. The University of Melbourne reported a 12% increase in international enrolments in 2024, while RMIT recorded a 17% uplift – despite headlines and various proposed policy measures to curb international student enrolments over the past 18-months.
Adding further complexity to the supply challenge is the fact that many of Melbourne’s leading universities are landlocked, with limited ability to expand their on-campus accommodation offerings. Historically, domestic students requiring housing have gravitated toward these university-owned options, but with physical constraints limiting future development, institutions are increasingly turning to private PBSA operators as delivery partners. This shift is occurring in parallel with a rise in domestic students relocating for study - creating demand pressures that extend beyond international cohorts. Public-private collaboration is now essential to ensure both international and domestic students have access to appropriate, proximate accommodation.
Why This Matters - And What Can Be Done
The implications of an undersupplied PBSA market extend beyond the international student population. More domestic students are considering PSBA largely because of pressures in the private rental market. In 2009 under 10% of Australian students were studying interstate, however statistics from 2023 show that nearly 20% of Australian students are enrolled in universities outside their home state, fueling underlying demand.
Purpose-built student housing offers more than secure and community-oriented accommodation- it also relieves pressure on the broader rental market. With Australia’s average household containing 3.1 bedrooms, 3,000 new PBSA beds could theoretically free up around 950 dwellings for families, essential workers, and the wider population within the inner Melbourne market.
In light of these figures, policymakers must recognise PBSA not merely as student infrastructure, but as a critical component of Melbourne’s urban housing mix. Removing barriers to planning approvals, enabling institutional investment, and supporting long-term development pipelines will be vital.
Ensuring a steady stream of appropriately located PBSA is not only an educational issue - it’s an economic and social one. If we want Melbourne to remain globally competitive and livable, we must take a coordinated approach to ensuring Melbourne has a thriving PBSA sector.
