JSE-listed Redefine Properties has acquired a new development site for student accommodation near Melbourne University, in Australia.
The 700-bed development, which will start in 2018, is expected to cost A$103.3-million, with Redefine’s share of the development cost set at A$93-million with 10% income yield.
The real estate investment trust is already developing an 804-bed, A$139-million site in the area.
“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,” CEO Andrew Konig said.
“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,” he added.
A JLL Student Accommodation report has shown that, while total full-time students in Melbourne number just under 235 000, the existing supply of beds is around 19 200.