Where the kids roll

In this week's edition of Open House, I shared my thoughts on the affordability of 'affordable homes'. To read the full editions in your inbox every Wednesday, subscribe for free on my website (https://ashwinderrsingh.com/).

Here’s an interesting question to ponder - are bad college hostel experiences a thing of the past, or are they here to stay? If it’s the latter, students need a place to call home. With more students interested in pursuing higher education, it’s arguably no better time than now if you’re a company involved in providing housing for students.

Student housing companies are rubbing their hands in anticipation of what’s to come, higher demand from Indian and foreign students. Companies in this space might not be household names, but the market is expected to boom and expansion plans are afoot.

What’s the situation abroad?

Major foreign education destinations like the UK, Australia, and Canada have been grappling with a persistent challenge - the student housing crisis. There’s a shortage of affordable and accessible accommodation. This has fueled the need for innovative and cost-effective solutions. What complicates matters are evolving migration rules and visa regulations. With more non-conventional courses, the demand-supply dynamics have been further diversified.

It's on the uptick in India

Post-pandemic, student housing rentals have steadily increased by 10-15%. Last year, it was estimated that student relocations were about 11 million. It's projected to reach 36 million by 2036. Student enrollment in higher education is projected to reach over 92 million by 2036. It's clearly an emerging asset class in India. Here are some of the things to keep in mind:

• Education boom: There's a booming education sector with more students in colleges and universities than ever before. The quest for quality education means students are looking beyond their hometowns. Combined with the government's schemes to improve education infrastructure, there's a growing demand for student housing.
• International students: Let’s not forget that international students number in the tens of thousands in India. That’s only expected to increase as more Indian universities partner with foreign varsities for collaboration and exchange programmes.
• Urbanisation: There's increased urbanisation, and urban centres are now home to more educational institutions. The facilities are world-class, with access to internships and jobs and a dynamic campus life. That's necessitated modern and accessible student housing.
• Lifestyle preferences: Many students aren't interested in the age-old hostel experience that previous generations went through. Times have changed and this generation has their own preferences. Accommodation should not only have a conducive environment to study but also have recreational facilities like WiFi spaces, gyms, etc.

There was an opening

Given the high enrollment numbers across the country, the student housing demand couldn’t be met by educational institutes that operated Purpose Built Student Accommodation (PBSA). This opened the door for the private sector and new-age startups. There were different avenues: 

• BOOT model: This is the Build, Own, Operate, Transfer (BOOT) model. The developer can build and manage the accommodation on land provided by educational institutions.
• Unsold spaces: Several residential projects near educational institutions lying empty present a great opportunity. These are large dormant inventories that can be converted into student living projects.

Who are the players?

There are only a handful of companies in this sector. Stanza Living has 70,000 beds across Indore, Vadodara, Jaipur, and Coimbatore, among other places. Your Space has 5,500 beds across Delhi, Mumbai, and Pune, with expansion plans afoot. Cities like Bengaluru, Delhi-NCR, Mumbai, and Pune are at the forefront of new-age student accommodation.

Just getting started

PBSAs have gained traction thanks to increasing enrollments and a dearth of well-maintained and affordable spaces. These are new platforms for established developers to diversify their traditional real estate assets and for startups to innovate. What will be interesting to see is how companies build their brands and account for changing tastes and preferences. We know India’s potential and ambitions to become an education hub and offering excellent living facilities should be part and parcel of that.