Future Trends in Student Housing

Kishan Thakkar K

Introduction

Students coming from different backgrounds prefer accommodation within the campus. The available hostels often fall short of the total requirement. Many times, amenities offered are not enough for a comfortable stay. Students are compelled to choose the option of paying guests located near campus. Typically, such options are relatively expensive.

Presently, India has approximately 34 million students in the higher education space, which is almost double the size of the student housing market in the West. Concerning the lack of supply, the demand is very high in India. 

For instance, as per the official statistics available, the top leading states experience the unmet demand to the tune of 30-60%, about the numbers of the students. An attractive rental yield of 15-18%, will bring more players as the ‘student housing’ opportunity becomes more appealing.

International Student Housing

First, student housing became an organized assets class in the USA, followed by the UK. The US market became organized in 1985. Currently, Student Housing in India is too small, but it is steadily becoming organized.

Future trends in Student Housing in India

In India, there are currently 34 million students enrolled in higher education. As per the reports of the JLL, the vision for the student housing asset class in India is worth mentioning, which are as below. 

“Today students need a homelike atmosphere with all the facilities within a reasonable distance. They also need interaction spaces outside the residence where they can discuss, study, and entertain in a group. There is a need to have a different kind of security and health environment created to meet their specific needs as well as address the concerns of parents who are sending them for study. With the migration of students from rural to urban areas and metros, student housing has very big potential.”

Cdr. Manoj Bhatt (Retd.)
CAO, IIM Ahmedabad

Following key points are the finding from the survey of student housing developers,

Current capacity (beds) – 6,500+

Major presence / Focus cities

Hyderabad, Pune, Bengaluru, Chennai, Indore, Kota, Dehradun

Expected occupancy rate – 95-98%

Expected 5-yr CAGR in the number of beds provided – 95 – 100%

Categories of student housing available

– Basic

– Medium

– Premium

Pricing (in INR)

Basic: 90,000+

Medium: 120,000-180,000

Premium: 175,000+

Average area per student (sq ft) – 150-180

Expected yield rate – 15-18%

Conclusion

Student housing is one of the emerging concepts in India. This assets class commands a yield that is higher than the commercial real estate yields. Many developers who are already operating in student housing are projecting a yield in the range of 15-18%. 

The Government of India, through the UGC and HRD ministry, has done a praiseworthy job in raising the enrolment level in higher education. It is expected that the proper focus on guidelines and the participation of the private players can bridge the wide unmet gap that exists currently.

Thank you for reading!

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