Student-to-bed ratios reveal Sydney’s PBSA shortfall despite rising supply across Australia

While higher interest rates, elevated construction costs and tighter development feasibility have constrained activity across many real estate sectors, capital has continued to flow into Australia's living markets. Build-to-Rent (BTR), Purpose-Built Student Accommodation (PBSA) and Co-living have all experienced a significant increase in investment and development activity as investors seek exposure to sectors underpinned by structural demand drivers rather than cyclical growth. In 2025, The share of investment into the Living sectors accounted for 22% of total Australian real estate investment, a share comparable with the more mature UK Living Sector market. 

PBSA remains the largest and most mature Australian Living Sector market and continues to grow in volume. Since the start of 2022, completed and delivered accommodation supply has increased by approximately 20,000 beds despite one of the most challenging development environments in recent memory. New projects have been delivered across all major capital city markets, supported by strong international education demand and investor conviction in the long-term fundamentals of the sector.

The bigger question is whether enough beds are being delivered, and in the markets that need them most.

At Savills, we continuously analyse forward-looking indicators to inform our assessment of future rental growth and occupancy performance. Put simply, we seek to identify markets where demand is anticipated to outpace supply, as these conditions are typically supportive of stronger rental growth and occupancy outcomes.

One of the key metrics we track is the ratio of commencing international students, the primary target cohort for PBSA, against the supply of privately operated student accommodation beds. It is a simple measure, but an effective one. The higher the ratio, the greater the competition for accommodation. The lower the ratio, the more balanced a market is likely to become.

Over the past decade, this ratio has trended downward across Australia. Significant investment in new PBSA development has steadily increased accommodation supply, helping to narrow the historic imbalance between student demand and available beds. Bed numbers have increased from approximately 75,000 beds in 2015 to 135,00 beds today, reflecting the scale of capital that has entered the sector.

Looking ahead to 2029, most major Australian markets are expected to continue this trend. Savills forecasts ratios of approximately 2.6 commencing international students per bed in Melbourne, 1.3 in Brisbane, 2.3 in Perth, and 1.4 in Adelaide.

Sydney, however, stands apart. Our forecasts indicate Sydney will reach approximately 4.9 commencing international students per bed by 2029, making it the only major Australian market where the ratio is expected to increase rather than decline. 

“The implication is straightforward. New supply in Sydney is simply not keeping pace with demand growth.”

International student numbers continue to expand across Sydney's major universities. Over the past three years, international enrolments at UNSW have grown by approximately 34%, while UTS has recorded growth of approximately 18%. Despite strong PBSA delivery across student precincts such as Kensington and Kingsford, developers are struggling to keep pace with the scale of demand emerging from the city's university sector.

As traditional PBSA markets become increasingly constrained, developers are responding by pursuing more flexible accommodation models. Co-living developments have emerged as a particularly attractive solution, with development sites across Glebe, Ultimo, Chippendale and Redfern increasingly being acquired and repositioned for this use.

The overlap with student demand is obvious. These locations provide proximity to major universities, transport infrastructure and employment nodes, making them highly attractive to international students seeking accommodation outside traditional PBSA assets.

However, Co-living's appeal extends beyond the student market. Unlike a purpose-built student asset, Co-living allows operators to accommodate a broader pool of residents, including young professionals, key workers, international arrivals and others seeking flexible accommodation solutions. It also provides a natural next step for graduates who are familiar with purpose- built student accommodation and are seeking a more mature rental solution with a ready-made community. This diversification widens the tenant base and reduces reliance on a single demand cohort.

For developers and investors, that tenant flexibility is becoming increasingly valuable. The ability to capture growing student demand while maintaining exposure to the broader rental market provides an additional layer of occupancy protection. Rather than relying solely on university enrolments, operators can adapt to changing market conditions and target whichever demand segment is strongest at a given point in the cycle. This flexibility is becoming increasingly important at a time where international student numbers face greater scrutiny.

The sector's greatest opportunity may lie at the intersection of student accommodation and flexible living. While much of Australia is seeing supply gradually catch up with demand, Sydney continues to exhibit one of the strongest accommodation shortfalls in the country. The emergence of Co-living as a complementary housing solution is a direct response to that imbalance.

In a market where demand remains resilient, but delivery is increasingly difficult, flexibility may prove to be the Living sector’s most valuable advantage.