YIELDS REMAIN STRONG IN AUSTRALIA
Current indicative net initial yields in Australia remain the strongest for prime student accommodation across mature and emerging markets. Averaging 6.75%, net initial yields have remained static throughout the past 12-months, primarily due to the limited amount of transactions.
In comparison, prime capital city yields elsewhere are all showing net initial yields under 6%, including the USA 5.91%, Spain 5.25%, UK 4.30%, France 4.25%, and Germany 3.80%.
There is, however, strong sentiment to suggest that yields are contracting in Australia, given the weight of capital that has entered the market and also the spread of current yields to the 10-year bond rate, compared to more mature transaction markets.
The Australian portfolio is therefore well positioned to deliver strong investor returns in the future as we continue to receive the benefit of first-mover advantage in new markets such as Melbourne and Perth.