A built-to-suit student housing facility can offer yields of around 14%
At a time when the residential market in India is gradually looking up, especially the ready-to-move-in, and the commercial segment is eagerly awaiting the launch of the first real estate investment trust (REIT), student housing offers opportunities both to those who have the appetite to invest and developers who could bank on it as a lucrative rental yielding revenue stream.
Currently, there are several players in the student housing space who have entered the market knowing fully well that there is huge demand but lack of supply. These include Your Space; Oxford caps which offers premium student housing facilities in Delhi NCR and is headquartered in Singapore; Gurugram-based Stanza Living that managed to raise $10 million a few days ago in a Series A round led by venture capital firm Sequoia Capital, Zolo, CoHo, Ziffy Homes and others.
As per a report by Federation of Indian Chamber of Commerce & Industry (FICCI) and JLL India, titled, ‘Future of India Real Estate: Deciphering the Mid-term Perspective’, student housing has the potential to yield more than 12 percent returns vis-a-vis the core commercial sector in which returns remain rangebound between 7 percent and 10 percent. This sector is expected to see a compounded annual growth rate of 38 percent to Rs 2,400 crore until 2020. It is currently worth Rs 1,267 crore. The sector is still at a nascent stage with the top 15 players dominating the organised space. They cumulatively operate around 84,500 beds and plans to grow to 1,60,000 beds by 2020.