Student housing: The next big frontier in Indian real estate
India is developing at a rapid pace and opportunities in urban areas for employment and education are drawing people from small-city and rural hinterlands. The biggest challenge for this migrant population is how to find proper accommodation, and students top the list.
Apparently, the number of students studying at colleges and universities in India and those who are able to access campus hostel facilities are extremely disproportionate, with the latter accounting for a mere 20% of the total volume. Students are searching for places to stay, without wanting to get into the hassle of renting a flat or an apartment. Hence, there is a huge demand for student housing, unlike ever before.
Add to this, the fact that the bulk of this student housing demand is catered to by the unorganised sector comprising rented accommodation and private hostels, which are often below student tastes and expectations. It is this demand supply gap that has led to an increase in investor interest to develop and operate well-located, high-quality purpose built accommodation.
A recent survey by Knight Frank, Global Student Property Report 2019, says that “India has the youngest population in the world, with some 18% of the 1.3 billion-strong population aged between 15 and 24. More than 34 million students are currently enrolled in courses at universities across the country, and this figure is expected to rise." Furthermore, the current demand for purpose-built student accommodation (PBSA) bed spaces across the country is estimated to total more than 8 million.
If we look at the organised players in the segment, there are only about 20-odd firms in the student housing space as of now.
Untouched by NBFC crisis
It is interesting to note that the student housing is one segment of the Indian real estate which has emerged virtually unscathed from the financial strain extending out of the NBFC crisis. But that’s not all. Besides catering to the students’ demands, this segment is also lucrative from investment point of view. According to a 2018 report by JLL, a real estate consultant firm, "student housing has the potential to yield more than 12% returns vis-a-vis the core commercial sector in which returns remain range-bound between 7% and 10%. Also, this sector is expected to grow at 38 percent CAGR until 2020, to ₹2,400 crore."
It is this potential that has led many start-ups to enter the fray. Student housing providers such as Tribestays, PLACIO, Stanza Living, Oxfordcaps, Campus Student Communities, Simplyguest, etc. currently operate in Delhi, Pune, Bengaluru, Noida, Mumbai, Indore, Dehradun, Ahmedabad and Jaipur.