May 31, 2024

Learning Curve – Student Accommodation is failing the private credit test


This week’s CPI announcement, at 3.6% YoY (ABS), reinforced to markets that there is still work to be done before any likely RBA rate relief. Given the well-publicised tight vacancy in the housing market, elevated rents (7.5% YoY) continue to be an area of focus. Private capital (debt and equity) has been largely inelastic in responding to one part of this housing supply-demand dislocation, Purpose-Built Student Accommodation (PBSA). 

While we expect the supply-demand imbalance in PBSA to persist in the short term, we continue to see broader opportunities in residential apartment projects. Consequently, we have increased our exposure by 2% to 11% in the Merricks Capital Partners Fund over the past months and expect this to increase a further 5-10% in 2024. 

Source: JLL Research

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