Realty players must push student housing to beat slowdown
The demand for student housing is expected to see a rapid growth in India and real estate firms should tap opportunity in this segment to beat current slowdown in the residential market, according to JLL India.
The consultant advised builders to convert their under- construction housing projects into student housing, which has immense scope to be developed as an asset class for real estate companies.
Real estate sector, especially the housing segment, is facing a multi-year slowdown due to low demand because of high prices and significant delays in project completion. Housing sales have been further impacted by the demonetisation move.
“The demand for student housing in India will continue unabated and in fact grow rapidly, so this is an alternative real estate segment that has all the hallmarks of becoming a revolutionary new product in Indian realty,” said Subhankar Mitra, Local Director–Strategic Consulting, JLL India.
He said the education sector in India is growing rapidly and number of students enrolling for higher education each year is also increasing. “…student housing is obviously a complimentary product to this growth”.
Interestingly, Mitra said the opportunity has come at a time when residential real estate is currently slow. He said “certain developers could bank on this opportunity to transform specific under-construction residential projects into student housing, bringing it under the more lucrative rental-yielding commercial project stream.”
The emerging concepts like student housing could help developers and investors diversify into an income-yielding asset class that can potentially offer higher yields than the commercial office and retail assets, the report said.
JLL said that globally student housing is acknowledged as an important and lucrative real estate segment, generally included under ‘alternative’ real estate asset classes.
In the US and the UK markets, student housing is already an established and investor-friendly asset class because of its size and attractive market yield.
Globally, the student housing segment, which has already attracted 200 billion dollars of investment, is essentially operated on a lease rental basis, the report said.
At present, student housing in India essentially comprises of buildings that primarily offer residential accommodation for large numbers of students in boarding schools, colleges or universities.
However, the residential facilities in such institutions are lower than the demand. Also, the services and amenities they often fall far short of the international standards seen in established student housing markets such as the US or UK.
“The potential for success of in the student housing real estate market in India could be similar or even more to that in the UK. Some of our cities, such as Pune, Bengaluru and Chennai, see very high annual student enrollments,” he said.