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28-10-2015, 09:20 PM
- Oct 28 2015 at 1:10 PM
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[img=620x0]http://www.afr.com/content/dam/images/g/i/h/e/o/j/image.related.afrArticleLead.620x350.gkjf4s.png/1446021746947.jpg[/img]Singaporean private equity group Valparaiso is converting the old Boeing building in Brisbane into student accommodation. Supplied
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by Mark Ludlow
Property investors and town planners are concerned a wave of new student accommodation in Brisbane could create inner-city "slums" and hurt property values.
Brisbane City Council is offering big discounts on infrastructure charges for developers to build student housing. There are now 19 development applications to build more than 6500 new beds in and around Brisbane's CBD.
The council has approved six developments since the incentive scheme was launched by Brisbane Lord Mayor Graham Quirk in February.
The latest is a two-tower apartment complex, backed by Singaporean company Wee Wur Holdings, to build 1608 units in Woolloogabba, two kilometres south of Brisbane's CBD.
It follows the $110 million re-development of the old Boeing building on the corner of Adelaide and Wharf Street in the city by another Singaporean private equity group Valparaiso, under the company name "Student One".
The group paid $65 million for the prime office space site as well as a food court across the road, which it will turn into a new $120 million 41-storey tower - also for student accommodation.
The incentive scheme for developers - which can save them up to 80 per cent on infrastructure charges - is open until July 2017.
The development must start construction by mid-2018 and must be within a four-kilometre radius of the city centre. The council has not set minimum requirements for the size of rooms, but there is an expectation they would be a market standard of 20 to 22 square metres.
But the units planned in some student accommodation in Brisbane will be less than 10 square metres - about one-fifth of the size of an average apartment development of 50 square metres. There will also be rooms with up to six beds in some of the Brisbane developments.
A town planner, who did not want to be named, said there was growing concern about the precedent the student accommodation would set for the city, especially with lower requirements for room size as well as lack of car spaces.
"There is a feeling it will just create slums in the city," the town planner said.
Other investors are concerned about the impact the student accommodation will have on other premium apartment developments in the area, especially if it is used for short-term use.
'A GREAT ECONOMIC GENERATOR'
But Brisbane's Lord Mayor said the projects would be quality, purpose-built accommodation only for students.
"This incentive has helped to make projects viable that previously wouldn't have stacked up financially," Councillor Quirk said.
"Brisbane has a significant student population and it is great to offer purpose-built accommodation options in inner-city areas where there is easy access to public transport and local services."
Brisbane City Council hopes to capitalise on the growth in overseas students coming to the city. There are now 75,000 international students in Queensland's capital, generating $3.77 billion a year, making international education the city's biggest export market.
Councillor Quirk said there was now a shortage of student beds in the city, raising hopes some of the new development would be ready by 2017.
"There is a large interest from the tertiary education sector and I am strongly of the view that this incentive will be a great economic generator for our city," he said.
But Labor leader in Brisbane City Council Milton Dick said he was concerned there was not enough infrastructure and support services for the high-density student living.
"These are revenue-making machines for developers," Mr Dick said. "I'm concerned about the council giving the green light to large dormitory-style developments without thinking of the consequences.
"The last thing we want to see is high-density dormitories set up in the city and suburbs without proper services for overseas students."
Property Council of Australia's Queensland director, Chris Mountford, said student accommodation was a legitimate investment asset class.
"It's not operating like hotels," Mr Mountford said. "This is purpose-built, longer term accommodation. I'd be more concerned about students sharing a single house."
Private equity firm Blue Sky - which is planning a 283 bed, 12-storey tower in Woolloongabba - is offering investors returns of 15 to 18 per cent for a minimum $50,000 investment.
Blue Sky Private Real Estate's Adam Vaggelas said the company saw good earning potential in student accommodation. He said there was a shortage in student accommodation across the country compared with other countries.