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Student housing can attract $50-billion private investment, says report

The potential is fuelled by the demand for purpose-built student accommodation (PBSA), which is set to grow by 8 per cent annually

Vinay Umarji  |  Ahmedabad 

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As universities in India are unable to fully cater to the rising demand for accommodation, the market has opened up a private investment potential of $50 billion, says a latest Global Property 2019 report by

The potential is fuelled by the demand for purpose-built accommodation (PBSA), which is set to grow by 8 per cent annually from the current 8 million beds to 13 million by 2025, the global real estate consulting firm’s report shows. In comparison, the current demand for PBSA bed spaces in the US stands at 2.6 million beds.

The investment potential of $50 billion in PBSA comes at a time when India has seen barely $100 million worth of investment in the sector in 2018. Moreover, compared to this, the US — the largest international students destination — has a PBSA market already valued at $65 billion.

With only 20 per cent of the demand being met by university operated supply, the report estimates a potential to deliver 6 million beds on green field and another 2 million on brown field land. As such, the market in India is driven by a large volume of private owners with relatively small portfolios of off-campus hostels.

“Currently, the bulk of the demand is serviced by the unorganised sector comprising rented accommodations and private hostels. These properties are often below student expectations. The demand-supply gap, coupled with strong fundamentals of the sector, has led to an increase in investor interest to develop and operate well-located, high-quality purpose built accommodation,” said Saurabh Mehrotra of the National Director of Advisory Services, India.

According to the report, there are two major factors contributing to reaching the target. Firstly, India’s GDP growth has fuelled the emergence of a burgeoning middle class population – estimated to be growing at a rate of 25 million each year. Subsequently, this has resulted in increasing demand from businesses for more highly educated workers who hold degree level qualifications. Second factor is the demographic dividend where India has the youngest population in the world, with some 18 per cent of the 1.3 billion-strong population aged between 15 and 24.

By 2020, India wants 30 per cent of all in the age group of 18 to 23 years to be enrolled in higher education courses. This would increase the country’s student population to 40 million, a figure which is nearly double the current number of students studying in the US.

Even globally, said James Pullan, global head of Student Property, Knight Frank, students attending universities struggle to secure housing amidst structural undersupply. Pullan termed it as a “global housing crisis”.

“PBSA has become a global asset class, underpinned by a continentally mobile student population and an increased recognition across the world of the importance of higher education,” Pullan said.

Geography-wise, some of the top Indian hotspots for student accommodation include Bengaluru, Pune, Hyderabad, Jaipur, and Nagpur, among others. Of these, Bengaluru has the highest concentration of university colleges in India, with the current student population in professional courses estimated at 6,60,000 of which 3,06,377 require accommodation and 10 per cent of these are covered by on-campus PBSA provision.

On the other hand, Pune, an emerging IT, manufacturing and start-up base, has a student population of 264,350, of which 191,937 need accommodation, with 11 per cent being covered by on-campus PBSA provision.

Growing market

  • Only 20% of student accommodation demand met by university operated supply
  • Potential to deliver 6 million green field, 2 mn brown field beds in student accommodations
  • Compared to Indian potential investment of $50 bn, US market already valued at $65 bn
  • Demand for in India to rise from 8 mn to 13 mn by 2025
  • Investments in Indian student housing touched $100 mn in 2018

First Published: Fri, June 07 2019. 22:54 IST
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