Student housing sector to attract $700 million investment by 2023, says Report

There is only one hostel bed available for every six students enrolled for higher education in India. The student housing industry, therefore, sniffs a great opportunity. Their confidence also stems from the fact that people now want to spend more for a higher standard of living. The unorganised paying guest (PG) market is ripe for disruption.

A new report by the Student Accommodation Provider Association of India (SAPFI) and consulting firm CBRE, paints a bright future for the organised players. The report titled 'The Herald of a New Chapter: Student Accommodation in India' states that the student housing/co-living sector is expected to witness an investment worth $700 million and an addition of 0.6 million beds by 2023 across the country. Here are some key takeaways:

1. How is the organised student housing segment different from PGs? The report states that the difference is primarily "because they are tailored to suit end-user needs. It has relatively flexible lease terms, lower security deposits, shorter lock-in periods and less stringent house rules and regulations. It also offers housekeeping and daily maintenance services".
2. The student housing segment is on a rapid growth trajectory across the country and could witness a growth of 36 per cent between 2019 and 2023. Currently, the top 30 players in the student housing/co-living market have a cumulative stock of more than 250,000 beds (as of August 2019).
3. Student enrollments in the country have increased from 32.3 million in 2013-14 to 36.64 million in 2017-18; the government is targeting a gross enrolment ratio (GER) of 30 per cent by 2020-21, which is good news for the sector - it would result in higher demand for housing. The report states that "larger states such as Uttar Pradesh, Gujarat, Maharashtra, Karnataka, Rajasthan, Madhya Pradesh, Tamil Nadu and Andhra Pradesh account for a major share in colleges across the country. Most of these states have witnessed a steady pace of student enrolment in the last few years. Consequently, cities such as Bangalore, Jaipur, Hyderabad, Pune, Nagpur and Mumbai housing prominent educational institutions have emerged as educational hubs".
4. The students housing operators, meanwhile, are spreading their wings beyond the metros and bigger cities. The report states: "Most of the operators in co-living/student housing are not only active across major cities but also have a presence in educational hubs such as Dehradun, Jaipur, Chandigarh, Indore, Vadodara, Jalandhar and Kota. These cities have a greater number of migrant students than most other cities, thus marking their scope for student accommodation".
5. Investors in the co-living sector include prominent names such as Warburg Pincus, Sequoia Capital, Goldman Sachs, and HDFC amongst others. Warburg Pincus and Lemon Tree Hotels have entered into a JV called Hamstede Living. The initial investment in the company is over $200 million.

Also Read: Co-living: Housr plans mega communities

Also Read: Rahul Gandhi voices support for CA students demanding re-evaluation of answer sheets

Also Read: India gets maximum foreign students from Nepal; Karnataka favourite city for higher education: HRD