Currently, the bulk of the student housing demand is serviced by the unorganised sector comprising rented accommodation and private hostels.
The current demand for Purpose Built Student Accommodation (PBSA) across India is over 8 million bed spaces, a figure which is expected to grow at a rate of around 8 percent each year to touch 13 million beds by 2025, according to the Global Student Property 2019 report by Knight Frank.
Investment to the tune of $100 million was made in the Indian PBSA market in 2018. Knight Frank estimates the current potential demand for PBSA in the country to be approximately 50 billion dollars, the report said.
Currently, the bulk of the student housing demand is serviced by the unorganised sector comprising rented accommodation 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, said Saurabh Mehrotra National Director of Advisory Services, Knight Frank India.
Among the top hot spots for student housing are Bengaluru which has the highest concentration of university colleges in India.The current student population in professional courses is estimated at 6,60,000 out of which 3,06,377 require accommodation. Of this only 10 percent is covered by on-campus PBSA provision.
Pune is the 9th largest city in India and is emerging as a centre for IT and manufacturing and a strong base for start-up companies. Out of a total of 264,350 student population, 191,937 require accommodation. Only 11 percent of which is covered by on-campus PBSA provision.
Hyderabad has also been attracting a fair amount of student population in the country. Of the 29,300 students that require accommodation only 2 percent are covered by on-campus provision.
Jaipur and Nagpur are emerging clusters for student accommodation and they offer 15 percent and 13 percent on-campus provision to the student population in the city.
Noida and the Greater Noida have emerged as modern industrial cities, well connected to Delhi. Noida is the outsourcing hub for Delhi’s IT services. It is home to several private engineering, management and arts universities.
“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 under supply 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.” said James Pullan, Global Head of Student Property, Knight Frank.
“The Indian student population base is growing consistently. This growth coupled with push from the government to promote more enrollment 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 alternate asset class for domestic and international investors” said Shishir Baijal,” chairman and managing director, Knight Frank India.
The number of Indian students currently studying outside the home country is approximately 2.5 lakh. The number of universities in India is recorded at 864 in 2017 as per all India Survey of Higher Education, Ministry of HRD. India has the youngest population in the world, with approximately 18 percent of the 1.3 billion-strong population aged between 15 and 24 years.
By 2020, the Indian government wants 30 percent of students across age group of 18 to 23 years to be enrolled in higher education courses. This would increase the country’s student population to 40 million, a figure which is nearly double the current number of students studying in the United States.
Only 20 percent of the current demand is met by university operated supply. The student housing market in India is driven by a large volume of private owners with relatively small portfolios of off-campus hostels.Knight Frank estimates that there is currently a potential to deliver 6 million PBSA bed spaces on greenfield land located in proximity to universities, while a further 2 million can be delivered on brownfield land.