Start-ups see huge opportunity in student housing

Start-ups see huge opportunity in purpose-built student accommodation (PBSA) or housing specifically built for students.

“Sensing the potential of the student housing market, many start-ups have entered the fray,” said Anuj Puri, Chairman, Anarock Property Consultants.

He further said “Student housing providers such as Oxfordcaps, Tribestays, PLACIO, Stanza Living, Campus Student Communities, Housr, Simplyguest currently operate in Delhi, Pune, Bengaluru, Noida, Mumbai, Indore, Dehradun, Ahmedabad and Jaipur.”

The top 10 players in the organized student housing space collectively operating slightly over 75,000 beds with plans to touch nearly two lakh beds by 2020.

“With the growing demand for student housing, these players are beginning to fill the void by offering affordable, yet tech-enabled community-based living to students,” explained Puri.

Moving away from the herd, some niche players like Tribestays are targeting only a limited audience with luxury options to students who can afford high-end, state-of-art amenities.

According to Puri, “With more and more tech-savvy players eyeing the more advanced Western models of student housing, there has been fairly rapid product innovation. For instance, in terms of space design, companies are looking to provide rooms that are more thematic, fun and aesthetic. Many of them also provide study halls, activity rooms and gaming rooms.”

While these homes are vastly superior to regular paying guests (PGs) accommodation, they definitely come at a cost which ranges anywhere between Rs 7,000 - 20,000 for a single occupancy, depending on the locality and amenities on offer.

Challenges and Opportunities

Student housing holds a host of opportunities for all stakeholders. For developers, it provides a fresh avenue of diversifying from the presently tepid Indian residential market. Secondly, it is an emerging asset class with high potential for returns and low risk for investors. Lastly, it is a decisive value-add and a means of providing accommodation as well as a cohesive and secure environment for students by educational institutions.

“However, there are also a few spanners in the wheel. Challenges such as cost of construction and cost of land in bigger cities are real, especially in the light of the ongoing liquidity crisis that continues to hamstring many developers,” said Puri.

“Private equity investments into student housing were minimal at $60 million in the last two years. Also, there are no specific tax rebates for student housing ventures that may attract developers.

This market is still largely unorganised and sees limited participation from stakeholders such as the universities, which remain reluctant to collaborate with student housing operators.”

“The huge demand-supply mismatch is reason enough for developers to warm up to this sunshine sector and earn high rental yields – projected to be anywhere between 14-17 per cent, they are much higher than established asset classes like residential and commercial real estate,” he said.

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