Australia’s purpose-built student accommodation sector is nearing a critical juncture, with escalating construction and delivery costs threatening to delay or derail projects across the country, according to new research from Cushman & Wakefield.
The firm’s report, The Cost to Build: Higher Delivery Costs are Reshaping PBSA Feasibility, found that building costs are expected to continue rising through to 2028 in all major Australian cities.
Brisbane is forecast to be hit hardest, as Olympic-related and broader infrastructure works draw heavily on the same pool of labour and materials.
The findings point to a sector under growing strain, where developers are increasingly dependent on rental growth to offset ballooning costs and keep projects financially viable.
That reliance risks deepening affordability pressures for students already struggling with the cost of accommodation.
Josh Rose-Nokes, Director, APAC Living Research at Cushman & Wakefield, said enrolments climbed in 2025 to exceed pre-pandemic levels, with occupancy at record highs and supply remaining tight.
He noted that while demand fundamentals remain strong, the combination of elevated costs and tighter funding conditions has left development feasibility finely balanced in most markets nationally.
Rose-Nokes added that students are already feeling the pressure, and rents will need to rise in step with costs.
He pointed out that recent changes announced in the Federal Budget could also reduce the supply of non-new-build rentals in the broader private rental market, which may add to affordability concerns even as demand continues to drive rental growth.
The research identifies Sydney as the strongest market for PBSA development, with market rents tracking around 5 per cent above the level needed to support project economics, despite high land costs.
Brisbane and Perth are close to breakeven, while Melbourne and Adelaide need rent increases of roughly 2 to 4 per cent to remain feasible.
Canberra shows the largest shortfall, with market rents trailing economic requirements by around 17 per cent.
Projecting ahead to 2030, Sydney would need annual rent growth of just 3.4 per cent to stay feasible, well below Cushman & Wakefield’s 4.5 per cent forecast.
Melbourne, Perth and Adelaide fall into a tighter band of 4.9 to 5.5 per cent, while Brisbane at 6.7 per cent and Canberra at 9.1 per cent would require rent growth substantially above current forecasts.
Despite these pressures, the near-term construction pipeline appears relatively robust.
More than 12,500 beds are currently under construction and scheduled for completion by the end of 2028, a sharp increase from the fewer than 5,000 beds delivered in 2024 and 2025 combined.
Rose-Nokes said it is the longer-term pipeline that faces the greatest risk, particularly projects that have not yet secured capital and are exposed to the widest feasibility gaps.
He expects this to push investors toward stabilised assets, intensifying competition for the limited number that reach the market.
Will Kennedy-Cooke, Senior Director, Development and Commercial Advisory, Project and Development Services APAC at Cushman & Wakefield, said delivery quality would become an increasingly important factor in determining which projects move forward.
He explained that PBSA developments are tightly bound to academic-year intake deadlines, leaving them vulnerable to supply chain disruption.
Kennedy-Cooke said the projects most likely to succeed will be those backed by advanced planning, fixed-price procurement and experienced delivery partners, with greater adoption of supplier diversification, modular construction and adaptive reuse helping to lock in cost certainty earlier in the process.
