Colliers International to sell UniLodge-managed asset on doorstep to Melbourne University
Investors and student accommodation operators alike are expected to jump at the chance to secure a 281-room facility operated under management agreement to UniLodge at the heart of Melbourne’s CBD university precinct.
Colliers International’s Daniel Wolman, Oliver Hay, Guy Wells and Matt Stagg have been appointed to sell 746 Swanston Street by International Expressions of Interest closing December 17.
“746 Swanston Street provides a unique opportunity for investors and student accommodation operators alike – with an existing management agreement to UniLodge which expires in 2022 or upon termination – to enter into Melbourne’s burgeoning student accommodation market,” Mr Wolman said.
“Offering immediate scale and a key location, the asset will allow an operator to establish themselves as a key player in the student accommodation market. For investors, the strength of location and brand of UniLodge provides certainty of income into the future."
Also known as UniLodge @ Melbourne, the 12-level, 3,178sqm student accommodation facility was constructed within the former Royal Women’s Hospital nurses’ quarters. The building was extensively refurbished in 1992 as an affordable student accommodation facility with a capacity for 313 students across a variety of room types.
Mr Wolman said the 1,160sqm site was ideally located with a Swanston Street address at the corner of Lynch Street, opposite the University of Melbourne’s main Parkville Campus.
“With the main Melbourne University tram stop at the doorstep, the property is perfectly positioned close to the university and public transport making it the ideal location for a student accommodation complex,” he said.
“To the south of the site is the soon-to-be redeveloped former Women’s Hospital, which will provide a state of the art innovation precinct anchored by Melbourne University, further underpinning the location and appeal of Melbourne as the premier tertiary location in Australia."
Mr Wolman said the property operated at an occupancy in the mid 90% range, with the benefit of six and 12 month leasing agreements to students providing certainty of income.
“The opportunity to purchase an asset of this type and scale is rarely seen, particularly in the current growth environment of student accommodation,” he said. “Education is now Australia’s third largest export industry after iron ore and coal, and the largest service export.
“International student enrolments play a key role in student accommodation demand, with global students, particularly those from Asia looking to enrol in the best global universities to further their education.
“The appeal of Melbourne as a city and its liveability is underpinned by its world class universities including Melbourne University and RMIT University."
According to the Australian Government Department of Education and Training, some 32.8% of university enrolments in Victoria is derived from international enrolments which equates to more than 100,000 students. With a current supply of less than 20,000 beds, there is a significant shortfall in student accommodation properties across Melbourne, particularly surrounding Melbourne and RMIT universities, of an estimated 70,000 beds.
Mr Hay said: “Melbourne has seen a significant increase in appetite and demand from student accommodation operators and developers with numerous sites across the northern fringe of the CBD and throughout Carlton being purchased for new developments.
“We have sold a handful of sites to sudent accommodation developers in the last couple of months alone. 746 Swanston Street provides a ready made facility for operators and investors and is the first established student accommodation facility offered to the market in a number of years."
Being located within 50m of one of Australia’s top universities, Mr Wolman said the underlying demand for a site such as 746 Swanston Street from both operators and users was significant.
“Melbourne University was recently ranked in the top 50 global universities by a number of university ranking scales,” he said. “With the global demand for students and the recognition of education as a key driver of a city’s future growth, Melbourne is perfectly poised to capitalise on this, with strong universities across the city."
Mr Wolman, Mr Hay and Mr Stagg have also been appointed to market 51 Queen Street, owned by the same vendor, a Malaysian investment arm, have appointed Colliers International’s Melbourne City Sales team to divest of several assets from their Australian portfolio to take advantage of the strong demand from buyers.
“The market is as hot as we have ever seen it and savy property owners are capitalising on the demand from investors to sell their assets while the Australian dollar is still cheap for offshore buyers and our interest rates remain at an all time record low,” Mr Wolman said.
51 Queen Street is a 12-storey office building in the heart of the CBD between Flinders and Collins Streets. The building is approximately 4,800sqm and brings in a healthy long term incomce of more than $1.1million from a diverse range of quality tenants. The building is expected to hit the market in the new year.
Both 746 Swanston Street and 51 Queen Street are expected to receive interest around the $30 million mark.