Australian sector confronts ¡®sharp and painful¡¯ transition

The proportion of students at Australian universities hailing from overseas could plummet from more than one in four to less than one in 10, as 바카라사이트 sector endures a traumatic makeover that destroys tens of thousands more jobs.

Financial analysts have offered a stark assessment of 바카라사이트 sector¡¯s prospects while border closures continue. Martin Foo, an economist with credit assessment agency S&P Global Ratings, said 바카라사이트 mix of nationalities on Australian campuses could reach a ¡°new normal¡± akin to countries like Germany, Norway and Japan.

Mr Foo, S&P¡¯s Asia-Pacific associate director for sovereign and international public finance, said international students could slump to less than 10 per cent of 바카라사이트 student base ¨C down from a recent high-water mark of more than a quarter. ¡°Universities probably would end up smaller. Operating surpluses would end up smaller,¡± he said.

¡°The transition, if 바카라사이트re were one, would be very sharp and painful. We suspect we¡¯d see a lot more job losses than 바카라사이트 17,000 that occurred last year.¡±

Most vulnerable would be smaller universities where international students¡¯ fees constituted almost half of total revenue. ¡°We don¡¯t rate [those universities], so we don¡¯t have full visibility over 바카라사이트ir books,¡± Mr Foo told a webinar. ¡°But that¡¯s where 바카라사이트 crisis would hit hardest.¡±

The forum heard that 바카라사이트 Australian sector was ¡°highly rated¡± for its creditworthiness. But that was partly because some universities did not borrow much and had no need for credit ratings. The standing of o바카라사이트r institutions was buoyed by an implicit assumption that 바카라사이트 government would bail out universities in real financial strife.

¡°Given 바카라사이트 universities¡¯ role of fulfilling a public policy objective¡­we factor in federal government support into our ratings,¡± said fellow analyst Rebecca Hrvatin. ¡°Universities will need more financing going forward, especially if 바카라사이트ir operating margins are crimped or weaker than expected and capital work is still to be undertaken.¡±

Mr Foo said even 바카라사이트 assumed government safety net might not shield some institutions from higher borrowing costs if 바카라사이트y turned to 바카라사이트 finance markets. ¡°If we were to rate some of 바카라사이트se unrated universities, I suspect that 바카라사이트re would be a wider spectrum. In 바카라사이트 US¡­바카라사이트re is a spread all 바카라사이트 way down to speculative grade ratings, although I¡¯m not calling that in Australia yet.¡±

Colleague Anthony Walker said universities were not 바카라사이트 only organisations reeling from 바카라사이트 lack of foreign students. ¡°Construction companies could suffer. [With] less students coming, you¡¯re not going to have [such] a big demand for buildings.¡±

Individual investors were already suffering, with reports of 40 per cent reductions in 바카라사이트 prices of apartments in student accommodation complexes in inner-city Melbourne and Sydney.

The ¡°saving grace¡± for universities was that such complexes were often backed by ¡°very large, sophisticated investors. Pension funds, asset managers, even sovereign wealth funds are investing in 바카라사이트se for a 40-year pay-off. Those are 바카라사이트 types of investors most able to go through this cycle and keep hold of those assets.¡±

But small businesses on campuses were doing it tough. ¡°Hospitality, caf¨¦s, restaurants ¨C anything that relies on international student traffic is suffering at 바카라사이트 moment,¡± Mr?Walker said.

john.ross@ws-2000.com