Brookfield Acquires Half Stake in Australia’s Journal Student Living

Brookfield Asset Management has acquired a 50 percent stake in Journal Student Living, the student accommodation operating unit of Australian developer and investor Citiplan, as it seeks to capitalise on an influx of international students into Australia’s already tight private rental market.

The Canadian alternative investment giant is picking up the half stake in Journal nearly three years after Brookfield and Melbourne-based Citiplan formed a joint venture to develop purpose-built student accommodation (PBSA) projects in the country. The venture has three projects totaling 2,500 beds currently under construction in Melbourne and Brisbane, with Journal set to manage the A$1 billion portfolio once completed.

“Education is Australia’s fourth biggest export,” Brookfield’s co-head of Australia real estate Ruban Kaneshamoorthy said in a release on Monday. “We have the third-highest number of enrolled international students globally but limited high-quality purpose-built student accommodation in our capital cities relative to other education hubs. This provides an enormous opportunity and we view student accommodation as one of the best ways to invest in the living sector in Australia.”

The acquisition comes as independent advisory firm Oxford Economics expects PBSA room rents to grow by over 20 percent from 2024 through 2028, with the population of tertiary-aged students in Australia projected to grow by 15 percent over the next 10 years, outpacing other major student housing markets including the US and Britain.

Portfolio Buildout

Citiplan will retain a half stake in Journal following the transaction with financial details of Brookfield’s investment remaining undisclosed.

Formed in December 2021 with Brookfield as the majority shareholder, the Brookfield-Citiplan JV in 2022 paid an undisclosed amount to acquire its first site, a project directly opposite the University of Melbourne. Situated at 166-170 Bouverie Street in the inner-ring suburb of Carlton, the 465-bed property is expected to open before July 2025.

Last year, the JV acquired a site at 240 Margaret Street in Brisbane’s central business district from Singapore-based conglomerate Aspial Corporation with plans to develop a 31-storey PBSA tower which could deliver 952 beds upon completion in 2026.

In March the partners followed up with the acquisition of a second Melbourne site, at 100-106 Franklin Street, from local developer Landream. Brookfield has lodged a development application with the City of Melbourne to build a 39-storey student housing complex on the site, with the project set to add 1,019 beds to the city’s student housing supply.

“Since its inception, Journal has been offering students a unique living experience shaped by creativity, design, culture and a community-focused environment,” said Journal Student Living CEO Ian Davidoff. “Working with Brookfield, we are excited to continue to offer international and local students a choice to live in boutique, experience-led accommodation, which gives them the foundation they need to succeed in their goals.”

Prior to this latest deal Brookfield’s global portfolio of student accommodation was valued at $7.4 billion, with over 200 assets totaling 60,000 beds across Europe and the US. The alternative investment giant manages over $925 billion in assets globally, across private equity, infrastructure, real estate, credit and renewables.

Strong Demand, Tight Supply

Brookfield is acquiring Journal after the number of international students studying in Australia last year exceeded the previous peak in 2019 by 4 percent, fuelled mainly by China and India. Home to nine of the 100 top-ranked universities globally, Australia is estimated to have a shortfall of 7,000 student beds each year over the next five years as the pipeline of projects fails to keep pace with student arrivals, according to a JLL report published in March.

With supply of private rental housing remaining tight, elevated demand has led to a surge in rents, with average asking rates for 2-bedroom apartments in Sydney and Melbourne having jumped 38.5 percent and 21.2 percent respectively from 2020 to 2023, while the residential vacancy rate in those cities has declined to a historic low of 1.1 percent, according to JLL.

“Student accommodation also has a role to play in helping ease Australia’s housing shortage,” said Kaneshamoorthy. “Providing quality accommodation for domestic and international students takes pressure off the rental market in university towns. We see further opportunity to work with Australia’s universities to develop more student accommodation sites, particularly on the eastern seaboard.”

In response to rising demand in the sector, Blackstone acquired the 2,300-bed Student One portfolio from Valparaiso Capital last year for A$530 million, giving it three projects in central Brisbane.

In April, Australia’s largest student housing owner and operator Scape formed a A$1 billion JV with the Netherlands’ APG Asset Management and Canadian pension fund manager Ivanhoe Cambridge, which was seeded with a 1,000-unit project near the University of Melbourne. APG had backed Scape’s earlier development ventures, which were established in 2015 and 2018, with Ivanhoe Cambridge having committed $649 million to the company’s core strategy in 2022.

Earlier this year Singapore’s SLB Development lodged a planning application to develop 420 units of student housing in central Melbourne after acquiring the project site in 2022.

“Given that international student arrivals have grown at such a rapid pace, PBSA occupancy will remain incredibly high for over the coming few years, with rents already well above their pre-pandemic levels,” Nick Wilson, associate director of real estate economics told Mingtiandi.