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Universities will need to sell $25b real estate portfolio

The Australian university sector is in dire straits, with Universities Australia predicting losses of $16 billion across tertiary institutions over the next three years, as the usual influx of international students is stalled.

A UBS analysis of Australia’s 10 top universities points to the obvious answer to their off-balance spreadsheets: selling off the $25b in real estate currently owned by the institutions.

“To maintain their investment in research and innovation, their existing real estate holdings are likely to be considered as funding options,” the report, led by UBS analyst Grant McCasker, reads.

“Universities may look at potential sale and lease of existing buildings but also monetise their land holdings while partnering with developers.

“We would anticipate universities monetise existing land holdings and partner with developers rather than a significant amount of sale and lease-back transactions.”

Among the property is $17.3b of buildings, a further $5.3b in land, and $2b of ‘under construction’ properties.

The rental markets near popular campuses that rely upon international students are also suffering, with the biggest rental downturns being felt in Parramatta, NSW; Docklands, VIC; Wolli Creek, NSW; Toowong, QLD; and Richmond, VIC.

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