Student Housing is a relatively new concept in India. It has been popularized in the West and is slowly gaining traction in Pune, India. Student Housing is a form of low cost, affordable housing schemes built by reputed builders for students near the various university or college campuses.

The education industry is growing rapidly in India and is churning out a high number of professionals from every industry every year. The number of students enrolling in colleges in cities other than their home towns is also rapidly increasing. Especially in cities like Pune, Bengaluru, Mumbai, Chennai and Delhi. In a study done by JLL a mind boggling 26.6 million students migrate to different cities across India to pursue their higher education. Of those 26.6 million students the different university campuses can provide accommodation for only 18-20% of those students, leaving the rest to fend for themselves.

This provides a huge opportunity for builders to build lost cost structures near large campuses to be able to provide accommodation for the students. It is an even better opportunity for investors to invest in such properties because educational institutions rarely move locations and the constant stream of rent revenue is always a bonus in the selling prospect of such flats.

Pune, Bengaluru, Chennai, and Delhi-NCR are the regions, which have seen increased number of educational institutions and student population. This ever growing demand for accommodation by students has given rise to a new concept of ‘Student Housing’ in India.

Internationally the real estate players have already turned their attention to providing student housing and have been making financial gains because of it. In India the concept of student housing is so new that people are consider student housing as only the hostels, boarding schools in Schools and Universities. There is unavoidably a huge gap between the supply and demand of good student housing projects which the real estate sector can take advantage of, especially in the big cities.

Factors Contributing to the Growth of Student Housing in India:

Apart from limited accommodation with the universities and colleges, there are few more factors playing a vital role in increasing demand for student housing. Some of these include:

Limited Availability of Land at University Campus: Due to the large student population the college/university hostels, boarding homes just do not have enough space to fully accommodate the student population. In lieu of such a scenario it makes perfect sense to invest in a student housing scheme in Pune.

Low Risk Profile: Student Housing has low or no risk at all. Considering that there is a fixed income stream to the home owners and a guarantee in the form of the students’ parents, the student housing scheme feels like a no brainer on paper.

Student Expectations: Students no longer like to live the disciplined life which is forced on them in the hostels. Students would now like to live more independently and have a culture of mixing pleasure with studying. Renting housing turns out to be just marginally more expensive than living in a hostel and doesn’t come attached with all the rules and regulations of the universities.

Opportunity for the builders and investors

Luckily, the opportunity has come at a great time. Indian residential real estate market is currently going through a slowdown and builders are looking for options to sell out existing inventories. Now, this is a great opportunity for them to convert their existing under-construction residential projects into student housing projects and target the investors who want to earn rental yields from their property investment in housing projects.

Why it Makes Sense for Real Estate Investors and Developers:

Regular and High-income Growth: Student housing provides the investors with a clear knowledge of their income streams for a few years. Since the Universities and Colleges are not just going to move campuses overnight, the housing properties will know exactly what to expect from their investment. Even when the rest of the market might dip, the education industry stays strong and with that the steady rental income will keep coming to the investors.

Strong Demand Expectations: Students understand the important of a higher education. This is leading to astronomical enrollment figures in colleges and universities. More students means more opportunities for developers to create a selling point for investors in order to clear their unsold inventory.

Inferior Quality Accommodation in Educational Institutes: Some modern Universities and Colleges take into account their student population and hence have constructed really swanky student quarters. Now some may not be able to afford the student quarters in these Universities and hence will look for accommodation outside. On the flipside, some educational institute have not been able to upgrade their facilities due to financial or space constraints and students have the option on living in the sub-par facilities or look for accommodation outside. Both these scenarios just scream an invitation to the developers.

What do you think about the student housing revolution? Let us know in the comments below.