Singapore’s SLB Lodges Plans for 420-Unit Melbourne Student Housing Project

Singapore builder SLB Development is making its first foray into Australian student accommodation as it takes on a more than 400-unit development project in central Melbourne.

SLB lodged a planning application with the City of Melbourne last month to demolish a 12-storey office block at 225 King Street in Flagstaff precinct which it acquired in June 2022 for A$35.5 million (then $25.5 million).

“The strategy is in line with our focus on the various living sectors,” Matthew Ong, executive director and chief executive officer of SLB, told Mingtiandi on Wednesday, with the project marking the first-ever overseas student housing development project for the offshoot of Singapore developer Lian Beng Group.

SLB’s plans, which are subject to approval by the city council, call for a 24-storey building that will house 409 studio units and 11 two-bedroom apartments as well as communal areas and retail shops, based on official documents cited by local news site The Urban Developer.

Boosting Pipeline to Lift Bottom Line

The student housing project is designed to offer 1,359 square metres (14,628 square feet) of communal space including study areas, lounges, meeting rooms, games room and a gym, while there will also be 377 square metres dedicated to retail, according to Ong.

Ong said the company, which serves as the development arm of Lian Beng Group, has been exploring the purpose built student accommodation (PBSA) sector both at home and overseas in recent years, but “suitable sites” are hard to come by.

Located near the corner of King and Lonsdale streets, 225 King Street was formerly part of the Victoria University campus before the state university sold it to SLB on a vacant possession one and a half years ago.

The project is within a 10 minute walk of Victoria University’s VU City Tower campus, a 32-storey building at 370 Little Lonsdale Street which opened in 2022, as well as its law campus across the road at 295 Queen Street.

The project is designed by Australia-based firm Plus Architecture, which has also drafted student housing projects for the country’s largest university housing provider, Scape Australia.

The King Street student housing plan comes after SLB in 2021 finished consolidating the office and retail components of the Tivoli Arcade complex at 235 Bourke Street, together with Hong Kong’s Baring Private Equity Asia (now part of EQT Exeter) and local firm Futuro Capital.

Back home, SLB swung to a net loss of S$4.5 million ($3.4 million) in the six months ended 30 November from the S$8.1 million net profit it booked during the same period the year before, according to its latest financial report.

The company said higher borrowing costs and reduced contributions from its development business dragged down its bottom line as it has already nearly sold out its completed residential projects in Singapore.

Demand Outstrips Supply

Singapore players and investors have been raising their bets on Australia’s purpose built student accommodation market since the pandemic border controls were lifted in 2022, with foreign students returning to the country to find a shortage of available beds.

In January of last year, Centurion Properties, the controlling shareholder of SGX-listed Centurion Corp, proposed to build a 732-unit student accommodation complex at 17-21 Lachlan Avenue and 163 Herring Road in Sydney’s Macquarie Park for an estimated A$132.17 million.

In March 2022, Singapore sovereign wealth fund GIC bought a 49.9 percent stake in a portfolio of seven Aussie PBSA assets across Sydney, Melbourne, Brisbane, Adelaide and Canberra from SGX-listed Wee Hur Holdings for A$567.86 million.

Official government records showed international student enrolment in Australia rose 33 percent year on year to 940,310 in the 10 months through October 2023, which was 3 percent more than the number of enrollees prior to the pandemic in 2019.

There are an estimated 8,000 rooms of PBSA set to be completed across Australia between 2023 and 2026, which will boost the country’s existing supply of PBSA by 7 percent, according to CBRE, with the consultancy indicating that the project pipeline will fall short of demand.

“Australia is deeply under-penetrated with just 1 PBSA bed for every 16 students,” CBRE said in the August report.