With the rapid development in India’s education sector, a major sector which needs a push in current times is the increasing demand for student housing in India. If we see at the global level, student housing is always recognized as an important and lucrative real estate segment. In Indian real estate too, this segment is showing tremendous growth still it is considered to be in its nascent stage.
As per the latest study, around 34 million students are currently enrolled in the higher education space in India; still, the number of unmet accommodation is between 30 and 60 percent. According to real estate experts, “The market is in its nascent stage. However, this sector is just starting to grow in India and it has already attracted the attention of developers. More realtors’ needs to enter the market to meet the demand and this asset class has the potential to offer returns which are much higher than office and retail assets.”
So let’s understand in detail, what are the needs and demands of this sector?
Need for Budget-friendly housing
Major education hubs of India are Mumbai, Pune, Bengaluru, Chennai, and Coimbatore. At present, many students come to study in India from neighbouring countries where the level of educational facilities is not as high. So, the demand for affordable housing in more as students’ needs affordable stay options. However, it’s a challenge to find low-cost property in one’s budget.
Higher rent for PG’s
Shooting prices of PG accommodation, as well as hostels, have led to the increase in demand for student housing. A realty firm estimates that student housing in India offers a rental income of around 15 to 18 percent as compared to the retail and commercial sector which typically varies from 9 to 11 percent. This figure is also expressively than more developed international student housing markets. That’s why many developers are entering to meet the unmet demand of this sector.
Opportunity for developers
In another 4-5 years, student housing demand is going to see a high rise, thus making way for realtors and developers to focus more on such projects. The total volume of students in India is rather an important reason, why this housing segment is considered as an attractive proposition. As per many developers, this class is really an asset to them as the return is very good.
Under this model, developers could partner with educational institutions to build affordable hostels for students who want to live nearby their college. According to realty expert, “An experienced operator or the developer themselves will then be brought in to manage the operations of the hostel under a long-term management contract. Developers will either collect all the fees and bear the associated expenses or share the revenue and associated costs) with the educational institutions. It depends on a contractual arrangement. After a fixed number of years, the real estate will be transferred back to the educational institutions at no considerations.” Hence this structure can form the trajectory of the Indian student housing market in coming future.
Increasing demand but less supply
While government colleges and universities are unable to meet the demand for on-campus hostel accommodation, private universities and colleges demand much higher fees from students. So the student has no other way just to pay unregulated fees or rent to accommodate anywhere. Hence, this provides a good opportunity for investors and developers to focus more on this attractive yield-based real estate sector and increase the supply too.