The demand for student accomodation and co-living rentals is rising around the world and forecasters say Australia is set to join the trend.
According to the Savills Global Living Report, an increasing number of Gen Y and Gen Zers are moving out of home later and tending to rent more in the struggle to enter the mousing market.
The report says that unless these renters get assistance from their family 'the focus will be on how to provide the secure, rented accomodation needed now and for future generations'.
Around the world, student housing investment volumes have risen by nearly 90 per cent in five years, giving a clear indication of the direction that graph is heading.
Savill's Australia director for student accomodation, Conal Newland, told Australian Financial Review he expects a steady increase in purpose-built student accomodation (PBSA) in the short term which will kickstart a surge of investment into other residential-based asset classes.
"Increasing transaction volumes will, in our opinion, drive down PBSA yields in Australia, which currently sit much higher than other more mature markets, such as the UK and many European countries," he said.
In Australia, prime net yields for student accomodation are high at around 6.75 per cent but they have come in as investor interest grows and supply dries up.
Mr Newland said proposed tax changes to managed investment trusts could curb foreign investment in the sector and warned against such moves.
"Australian lawmakers should be mindful of passing legislation that may reduce the attractiveness of investments," he told AFR.