Investments in student accommodation in India reaches $10 crore in 2018: Knight Frank

On account of demand for Purpose Built Student Accommodation (PBSA) across India totaling more than 8 million bed spaces – a figure which is expected to grow at a rate of around 8 per cent Y-o-Y to reach 13 million beds by 2025, the investors have started to take the PBSA sector as a good investment option in India. According to the Global Student Property 2019 Report by Knight Frank, around $10 crore was invested into the Indian PBSA market in the year 2018. However, Knight Frank estimates the current potential demand for PBSA in the country to be approximately $5000 crore.

Speaking on the report findings James Pullan, Global Head of Student Property, Knight Frank said, “Purpose Built Student Accommodation (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.  The structural undersupply story is transparent with students attending universities across the world struggling to secure housing in what is a global housing crisis.  PBSA represents an opportunity for institutions to invest in an asset class that has demonstrated rental growth every year since the economic downturn.” 

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The Indian student population base is growing consistently; this growth coupled with a push from the government to promote more enrolment for higher education is a perfect recipe for student accommodation market to flourish. The forecast is highly promising and is likely to offer investment opportunities in this alternative asset class for domestic and international investors.”

Commenting upon the demand-supply gap Saurabh Mehrotra National Director of Advisory Services, Knight Frank India said, “Currently the bulk of the student housing demand is serviced by the unorganised sector comprising of 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. Knight Frank estimates that there is currently a potential to deliver 6 million PBSA bed spaces on greenfield land located in close proximity to universities, while a further 2 million can be delivered through retrofitting and augmentation of existing on-campus hostels.” 

Speaking on the investment trends in the student accommodation Rohit Pateria, Founder, Placio said, "There are over 35 million tertiary students in India, with no significant purpose-built student accommodation (PBSA) operators in the market. Over 10 million of these students relocate to another city within India. This created a huge demand for student housing in India, opening opportunities for all stakeholders including Real Estate owners, Universities and Students. " He said that off late, the investment has also started coming in towards building a purpose built student housing, both on campus and off campus. Universities are the biggest landowner, most suitable for Student Housing. This new segment of real estate is an ever-growing one and the investment made in it is definitely going to give good results. 

As per the report, there are two major factors contributing to reaching this target. India’s GDP growth has averaged more than 7% per year for the last decade and it is now the sixth largest in the world. This rapid 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. The second factor that will underpin the growth of the Higher Education sector in India relates to demographics. India has the youngest population in the world, with some 18% of the 1.3 billion-strong population aged between 15 and 24.