- Purchase price of $18.5M for student accommodation close to Brisbane
- To be marketed as both student and affordable accommodation
- The acquisition will be funded by debt
As Brisbane endures another snap lockdown and international students remain overseas, acquiring student accommodation may not seem like the wisest investment.
On the other hand, a little long-term thinking might lead to a business opportunity others could miss.
Aspen Group (ASX: APZ) announced to the market this morning its fourth acquisition for FY21, South East Queensland is the region, Upper Mount Gravatt the suburb.
The property is located about 10 minutes south of Brisbane’s CBD, close to Griffith University’s Nathan Campus. The company is describing this as a “co-living community” opportunity, which might otherwise be termed university student accommodation.
Following a strong half-yearly performance with positive figures across the board, the move is largely in line with the company strategy of providing “value for money accommodation,” or “affordable accommodation”.
Aspen outlined its intent on the lower-cost accommodation market when the company outlined the demographics of the suburb: “Relative to Australia and Brisbane, … Upper Mount Gravatt’s population is young and tertiary educated with a foreign ancestry, household incomes are low, and rents are high (2016 census)”.
The 64-apartment gated complex will have student styled accommodation, each bedroom including an ensuite, with common areas for each apartment including kitchen and dining.
Aspen group said the “property is currently operated as Uniresort, a student accommodation facility with the majority of its customer base attending Griffith University and nearby language schools.”
Putting a twist on the property due to subdued market conditions, Aspen said:
“We intend to broaden the student customer base to include other young, like-minded customers who value the co-living experience and relatively cheaper rents that currently average about $200 per week per room including furniture, electricity, water, internet and a fortnightly clean of common areas.”
The acquisition comes in at $18.5 million before transaction costs.
These were broken down as “about $280,000 per apartment, $60,000 per bedroom and $2,166 per sqm of internal area (excluding balconies and car spaces). The median sales price of a 3-bedroom apartment in Upper Mount Gravatt is $418,000 (realestate.com.au).”
Land valuation is $9.6 million with “… a residual purchase price for the improvements of $8.80 million or $1,030psm of internal area (excluding balconies and car spaces)… the replacement cost of the property is above $30 million including land.”
Aspen Group said the acquisition will be funded with debt.