How student housing as an alternate asset class is becoming the new growth marker

By: Angad Bedi, MD, BCD Group India

As per a market report, India’s student accommodation market has generated revenue of USD 30.1 million in the current year and is poised to register a CAGR of 7.2% between 2024 & 2029. It also highlights that Student housing rentals have seen a steady increase in the post-pandemic period, with an annual growth rate of 10-15%. This confirms the increasing demand for student housing. Furthermore, the number of students enrolled in higher education is expected to rise to 92 million in 2036, providing investors and developers with an opportunity to capitalize on the sector’s untapped potential and immense growth potential. It is expected that new players and potential international investors will enter the market. The Indian education sector has experienced rapid growth in recent years, increasing student numbers and policy shifts. As a result, the need for an adequate amount of high-quality accommodation is on the rise.

Amidst this disruptive ecosystem, where student housing continues to expand its share and impacting sectoral growth, the developers are in a great position to uncover new exciting opportunities that will eventually create more value in the coming years. A study suggests that student housing will grow by leaps and bounds as it is expected that student relocation will touch 31 million by 2036, which currently stands at around 11 million.

Besides, the vibrant and growing economy of India is driven by a rising population of ‘millennials’ who form an important part of the country’s workforce. Digital imperatives and technological innovations have put the spotlight on India on a global scale, creating more opportunities and prospects for the millennials across the country to move to prominent hubs like Bengaluru, Chennai, Hyderabad, Pune, Mumbai and Delhi NCR. This has not only created more demands for quality housing, but also created the need to come-up with affordable and quality options of accommodation. This can be considered another key factor behind the growth of the student housing segment. 

Moreover, there is clearly a change in demand patterns as unlike their parents, the millennials have a different take on home ownership. While selecting an accommodation, connectivity to their workplace, convenience and security are the factors on top of their decision-making tree and not ownership of the property. Moreover, a migrant workforce prefers rented apartments because of the uncertainty attached with the duration of their stay as well as cost savings in renting as against purchasing accommodation. The outcome is the increased demand for rental housing options like student-housing.

In a nutshell it can be said that developers have a lot to offer to this new demands and needs. While the overall real estate sector will continue to witness growth, emerging asset class like student housing will eventually become popular, prompting developers to find ways to innovate, and there’s never been a better time to foray into this domain where opportunities are plentiful and the growth curve looks promising. 

**Views expressed in this article are author’s personal and do not reflect the opinion ‘Realty & More’.