Growing Demand for Student Housing: An Attractive Investment Opportunity

Builders, investors chalk out plan to cash in on growing demand for student housing.

Introduction:
As the demand for quality student accommodation surges, the student housing sector has become an attractive asset class for both investors and builders in India. Private investors and developers are eyeing expansion into this lucrative market, while existing operators like CUIB by JV Venture, your-space, Stanza Living, and Olive by Embassy are looking to double their capacities. Global funds such as Brookfield Asset Management, Actis, and Kepler Land are also keen on entering this segment, evident from their bid for Good Host Spaces. With the potential to meet the rising demand for student housing, this sector presents untapped opportunities for growth and investment.

Growing Demand and Occupancy:
Student housing providers, including your-space, have witnessed a significant increase in building size and capacity, accommodating up to 150 students compared to the previous average of 40 to 45 students. The occupancy rates are expected to reach about 90% across all cities, particularly as the first full academic year post-covid commences. As per Colliers India, the current on-campus accommodations offer only 7.5 million student beds, insufficient to meet the existing demand, let alone the projected future demand. With private operators offering less than 100,000 beds, rental rates have surged by at least 20% following the market’s recovery. The student relocation rate within the country stands at 11 million and is anticipated to reach 31 million by 2036.

Market Insights and Opportunities:
Industry experts project that student enrolment in higher education will exceed 92 million by 2036, signifying immense potential for the student housing sector. The government’s new education policies, innovative technologies, and an influx of students pursuing higher education contribute to the rising demand for shared student accommodations. While several start-ups ventured into purpose-built student accommodation before the pandemic, only a few have managed to survive and become prominent players with sizeable portfolios across the nation. The post-pandemic scenario has seen a steady rise in student housing rentals by 10-15% YoY, further confirming the increasing demand for quality student homes.

Catering to Discerning Consumers:
In response to the growing demand for high-end luxury student housing, companies like Cappella are rolling out single-bed luxury student housing units, branded as CUIB, across the country. Many Indian parents prefer enrolling their children in top-tier domestic colleges, especially for medical studies, rather than sending them abroad. Consequently, there is a rising need for premium accommodations that allow students to focus on their studies without distractions. This trend presents attractive opportunities for investors looking to invest in education infrastructure.

Key Players and Expansion Plans:
Stanza Living, India’s largest tech-enabled managed accommodation company, aims to expand its hostel-style managed accommodation targeted at students and young professionals. With a current capacity of over 75,000 beds across 23 cities, the company plans to deepen its footprint in the market. Olive Living, managed by Embassy Group, is also gearing up for significant growth, intending to add another 20,000 beds over the next few years.

Conclusion:
The student housing sector in India is experiencing unprecedented growth and presents a compelling investment opportunity for builders and investors alike. With the rising demand for quality student accommodations and the projected increase in student enrolment, there is immense potential for the sector to flourish. The market is likely to witness the entry of new players, including global investors, in the Purpose Built Student Accommodation (PBSA) market, further fuelling its growth and expansion.