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The Latest Export to Strengthen Australian Commercial Property

20 February, 2019
Categories: Commercial

Popeye has his spinach. Samson has his hair. Australia has its exports. Whether iron ore or coal, our record-breaking economy stays strong when other countries buy our commodities. But one resource having a huge impact on our nation isn’t found in the ground.

Education is Australia’s third largest export. Each year, over 500,000 international students enrol in Australian universities and colleges, an amount expected to achieve new heights in the future. Total enrolments have risen 40 per cent in five years and it’s no surprise China scores highest for student intakes, making up 31 per cent of international student enrolments in Australia.

So, how do international student arrivals impact Australia’s economy? And how does commercial property benefit?

Rewards from education exports

When the population grows, the economy flexes its muscle. Director of Grattan Institute’s higher education Andrew Norton says the foreign student influx “is transforming the rental market, it’s transforming the nature of the restaurants in the area, it’s changing what the streets look like. So, this is having a big effect on certain parts of Australia well beyond the university gates.”

Imagine more people buying houses, more shoppers in stores, more properties built to house them, and more employees hired to keep up with consumer demand. Australia is exporting education, and in return it’s importing consumers. And these consumers aren’t penniless.

When I was at university, I saved on fuel by riding a moped and dodged the occasional haircut expense by chopping my own locks. But far from being the poor student stereotype, many international students (mostly Chinese) are funded by wealthy parents. Opulent students bring their family money to our Western shores and help local businesses flourish.

“There are huge numbers of international students living in the inner cities of Australia’s big capitals,” Mr Norton says. Students filling up these catchments are great for surrounding businesses, who feed, dress and entertain the foreign arrivals. This means local businesses stay relevant. And as a flow-on effect, demand for commercial tenancies rise and vacancies tighten.

You’d be a happy business owner when you have more clients and customers, and a happy commercial property owner when your tenants have more business.

Private colleges and flexible education exports

Universities take in the bulk of Australia’s students, while only 9 per cent of higher education students in Australia are enrolled with private colleges. But these smaller institutions are being looked at as a university substitute and receiving a growing number of international students each year.

Take Think Education as an example, a private education body which has multiple student intakes every year and no wait lists. Their flexible study modes benefit busy students and even offer international students in-house English lessons. Students arriving on our shores can be anxious about transitioning into Australian life, so Think Education can be both an education hub and a lifeline.

Institutions like this can expect to be relevant in the long run, and commercial property owners with suitable premises on offer can see this as good news. Afterall, private colleges aren’t found on traditional university or school grounds.

What private education providers look for in commercial property

These for-profit education providers look for new or modernised buildings, so Premium and A-Grade office properties are in high demand. The result for office properties which tick the right boxes is buoyant values and great tenants.

Location is crucial for students. They want proximity to their place of study and plenty of amenity to satisfy their daily needs. Therefore, private education providers look for space in sought after CBD and fringe CBD areas. Catchments with plenty of high-quality retail amenities bode well, and nearby public transport is a must because of the number of students who commute on buses and trains.

Office property near residential apartments and housing only help the allure, as private colleges know students like a short trip to school. Private education providers need offices for teachers and classrooms for students, so floor space should be flexible too.

The good news for education providers and their landlords is that the rate of international student growth is not slowing. Australia is seen as a high-quality country for education. Much the same as it is seen as a smart destination for investors.

For more information on how to invest in commercial real estate, get in touch with Properties & Pathways today.

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