Redefine currently has a A$139 million development underway in Melbourne catering for 804 beds. The new site at 500 Swanston Street is very well located in relation to Melbourne University with potential for up to 700 beds – development is anticipated to begin in 2018.
“We remain focused on procuring high quality properties and opportunities across strategic geographic locations and are very excited about the upside potential in student accommodation in Australia,” says Redefine CEO Andrew Konig.
A JLL Student Accommodation report says while total full-time students in Melbourne is just under 235,000, the existing supply of beds is around 19,200.
“There is capacity for a lot more purpose built student accommodation as the market is undersupplied. With a capital uplift potential on these developments and return on equity well ahead of offshore funding costs, the investment proposition is compelling from a total return point of view,” says Konig.
The development is expected to cost A$103.3 million. Redefine’s share of the development cost is A$93 million and it is looking to develop the site at about a 10% income yield.
The development falls squarely in line with Redefine’s stated intention to expand its presence in the purpose build student accommodation market in Australia, build scale to develop a specialist student accommodation fund and leverage its international management capacity.
“Despite all the doom and gloom out there are still developments afoot. Our agile approach to development enables us to remain on course towards sustained growth, regardless of market volatility. We look forward to reaping rewards from participating in what we believe is an exciting market which has the potential to expand,” says Konig.