In the past few years, the real estate sector in India is gradually moving from the conventional residential, commercial, retail, and hospitality real estate asset classes to an alternative real estate class such as student housing.
This new segment is increasingly attracting the attention of many companies. With more and more students are moving to big cities for higher education, these companies are now trying to tap into the needs of migrant students and offering student living exclusively.
Since decades, the US and Europe real estate markets have been enjoying the benefits of students rushing to secure limited organized accommodations. In India, the education sector is growing rapidly, and it is common to see students moving to big cities, for higher education. In a recent study, India has approximately 34 million students in the higher education space, out of which nearly 26.6 million students move to cities such as Bengaluru, Chennai, and Pune. Consequently, the demand for student housing in India is slowly gaining importance. Therefore, developers have spotted the opportunity and are venturing in this new real estate asset class. Investors are also looking at student housing as the next big trend in the real estate industry.
Reason for the increased demand for student housing
In the Union Budget 2019, the Government announced a scheme called ‘Study in India’ to attract 200,000 foreign students to pursue higher education in Indian universities. The recent Government initiatives and rising awareness amongst families have caused a huge increase in student mobility across states in India. With regulatory measures, the number of students on the country’s college campuses will witness an upsurge. This will also drive the growth in this segment. Therefore, student housing is getting fast recognition as a new real estate asset class with huge potential to grow in the coming years.
Insufficient accommodation facility
An estimated 35 million students enrolled in higher education, of which more than 75 percent live outside their homes. The existing hostel facilities in their university campuses can accommodate only 18-20 percent of the total migrant student population. Besides, a large number of students come from small cities to big cities to prepare for competitive exams. These students have no option but to stay in private hostels and lodges. Given the lack of college hostels, demand for student housing in the country will grow rapidly.
Demand for quality housing options
Most college campuses have limited number of hostel facilities for students and do not have all the requirements to accommodate a large number of students on campus. With limited hostel facilities in colleges, students are forced to live in unreasonable living quarters which do not offer them the amenities that they need. Thus, students today are increasingly preferring to opt for student housing in the vicinity of university colleges which has all the amenities food, electricity, WiFi, laundry, transport, air conditioning, and security.
Traditional PGs and hostels are out of touch with the actual needs of the student community. Instead, student lifestyle preferences have often been scrutinized as unwelcoming to the atmosphere of residential communities. Students prefer to live in a friendly space that gives them enough flexibility to choose their housemates or choose to live with spouse and children if married. Thus student housing could be a relief for students as it caters only to students and allows freedom of lifestyle choices.
Student accommodation sparks developers interest
With a growing number of students opting to study in universities in tier-2 cities, many new market players in the student housing sector considered it as one of their largest markets. To cater to this population, many realty giants have taken to the ‘lease and renew’ model to attract more students. With the support of institutional investment from domestic parties, developers are coming up with housing specifically built for students to meet the growing demand for quality student housing in higher education.