COVID-19 Culminating in Opportunity for Developers to Capitalize on Student Housing

Kishan Thakkar K

Introduction

One of the prominent sectors that is affected by COVID-19 pandemic is the education sector. Many universities around the world have been impelled to rely upon online education for several months. The majority of the opinion that is floating in the student community is that online learning cannot replace the on-campus experience.

The most important lesson that COVID-19 taught us is that we have to be resilient and adaptable as the landscape of the situation changes. That’s what one can observe in student housing real estate market. 

Before we jump forward, let us come on the same page by understanding what student housing is!

Definition of student housing

As per the lawinsider.com, “Student Housing means a residence for occupancy by groups of people not defined as a family, where such building is specifically designed for students of a college, university, trade school or non-profit organization for the purpose of providing rooms for sleeping and living purposes. Common gathering spaces, kitchen, cafeteria and sanitary facilities may also be provided. Typical uses include, but are not limited to, fraternity or sorority houses, dormitories, residence halls and boarding/lodging houses.”

lawinsider.com

Didn’t understand? Let’s go for it once again!

In simple language, for Indian context, student housing means what we generally consider as Paying Guest (PG), Hostel, Co-living spaces, providing comfortable spaces for living and also basic needs to students, freelancers, salaried person, etc.

Despite the current ‘trend’ of online education and hefty fees associated with a college education, student housing will continue to rise. This sector has benefited from recent demand trends in higher education. Although the pandemic has changed the rules of the games. Co-living and PGs are witnessing a revival as the economy is bouncing back.

COVID-19 impact on student housing & problems associated with it

You must have been impacted by the economic fall of the student housing sector due to the pandemic. We interviewed many students and employees who are affected, over the past year and a half. Job losses and promotion of working from home prompted employees to go back to their hometowns, resulting in low occupancy in student housing. 

Many universities and companies were deserted but for few people residing in PGs, has been overwhelmed by social isolation. Students have highlighted the problems questioning about the space provision per person, hygiene, etc. 

Some students from Mumbai University has been interviewed with The Free Space Journal, and raised few concerns as below, 

Salil Azad, a student from Kashmir studying in a South Mumbai college said, “Even if I return to a student hostel in Mumbai, what are the measures when a student is infected or affected by the Covid-19 infection after entering the campus? Will the MU hostel or any other student hostel provide medical assistance? Or, will they have to shut down the entire hostel? Where will other students quarantine themselves?” (Source: The Free Press Journal, https://www.freepressjournal.in/mumbai/mumbai-students-wary-of-covid-19-norms-in-college-dorms)

& one more student, Ramnaresh Pawar, an undergraduate (UG) student from Jalgaon said, “I was sharing the room with three students at JS Hall Hostel, Churchgate before I returned to my native. Now, I am a bit hesitant to return to the hostel because single rooms are allotted only for PhD students. There is no space in the hostel if I want to self-isolate or maintain distancing.” (Source: The Free Press Journal, https://www.freepressjournal.in/mumbai/mumbai-students-wary-of-covid-19-norms-in-college-dorms)

Above concerns raised by the students and the same questions from the salaried person, are directing towards some major changes in this sector. Real estate players have flourished rather than just adapted. Leaders who are willing to pivot to meet new demands can best serve their residents and ensure their own viability as the industry emerges from its current crisis.

…but the main question is how are the problems being solved by some of the major players of the sector? Let’s discuss!

Concerns & opportunities for real estate developers

What additional checks are needed as everyone return?

What options are there to optimize prices?

How to detect cases of infections?

Newer and innovative forms of development

& most important, how do you ensure social distancing and hygiene?

With the clear signs of the revival on the horizon, the industry has to meet the new demand and adjust to the paradigm shift that happened last month due to the economic fall-out of COVID-19. 

Investment in this asset class was driven by market potential; approximately 40 million students and a demand supply gap – only 20% students getting a hostel bed in the university; relative stability of cash flows and higher yields. Student housing operators and aggregators tapped into this market and invested in setting up larger facilities with many amenities and varying degrees of technology intervention. Rental yields (10-15% compared to 8-10% for commercial office assets) were also better than in other asset classes on a risk adjusted basis.

The factors that would be key for revival of this sector are as below

  1. Ensuring hygiene and safe environment
  2. Rooms with minimum sharing
  3. Appropriate pricing
  4. Architecture of the student housing

Conclusion

The ultimate goal of everyone must be living peacefully in a healthy way so that everyone can contribute to the betterment of society. The pandemic was uncertain and to tackle such problems requires analytical research for both tenants and developers. 

Discussing with a credible real estate agency is an excellent way to fetch a hefty return. All you have to do is contact Roodland, which provides the best real estate services. 

For any queries and suggestions regarding capitalizing on student housing, contact us at info@roodland.com and discuss all of your options with us!

Consider sharing with your friends, family and relatives, if you have found it useful.

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