The Cost to Build Living

Australia’s PBSA sector continues to benefit from strong structural demand, with higher education enrolments growing and provision rates remaining low by international standards. Occupancy is also at or near the highest levels recorded since the sector emerged.

However, higher delivery costs are threatening the feasibility of new development, putting the longer term pipeline at risk. This dynamic is resulting in:

• Greater pressure on marginal development schemes, particularly where planning, procurement or funding is not yet secured
• Continued support for PBSA rents, underpinned by limited availability and constrained future supply
• Stronger investor appetite for stabilised assets and advanced development opportunities with clear delivery pathways
• Increased focus on operator performance, design efficiency and procurement certainty
• Greater relevance for alternative models, including compact rooms, cluster formats, adaptive reuse and modular components

Market conditions remain uneven. Sydney currently has the strongest feasibility position, supported by premium achievable rents. Melbourne, Perth and Adelaide sit within a more marginal but plausible range, while Brisbane and Canberra appear more stretched given their required rent growth and construction cost outlook.

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The Cost to Build PBSA report provides detailed, market-specific analysis across Australia’s major PBSA markets, including:

• Construction cost escalation trends across major Australian cities
• PBSA development pipeline analysis by stage and market
• Market rent versus economic rent comparisons
• Required rent growth to offset construction cost inflation
• Feasibility outlooks for Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra
• Strategic implications for investors, developers and operators
• The role of design, operational performance, delivery partners and alternative development models in protecting feasibilit

For investors, developers and operators, the report provides a practical view of how rising delivery costs are reshaping PBSA supply, capital deployment and market strategy.

The Cost to Build PBSA report forms part of Cushman & Wakefield’s Cost to Build series, examining development feasibility across key real estate sectors.

As elevated construction and financing costs continue to influence:

• Development pipelines
• Investment decision-making
• Rental growth requirements
• Asset selection
• Delivery and procurement strategy

The Cost to Build series provides a forward-looking view of the structural constraints shaping Australia’s built environment.

For PBSA, the implications are particularly important. The sector is supported by strong demand fundamentals, low provision rates and high occupancy, but new supply is needed to mee the housing needs of students and the investor appetite to deploy capital into the sector.

Together, the series identifies:

• Which markets are best positioned to support new development
• How investors and developers can respond to a more complex delivery environment
• Where value creation opportunities may arise for well-capitalised groups able to manage short-term feasibility pressure