5 Reasons Why Student Housing is The Next Big Trend in Asian Real Estate
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There was a time when student housing was about living in old hostel rooms with minimal facilities. Over the last decade, there has been a cultural shift in the way students want to live. The days of old dingy hostels are now over. When it comes to accommodation, students today look for modernized housing with high quality services that elevate their living experiences.
Here are five reasons why student housing is the next big trend in Asian Real estate
· Higher Income and Growing Aspirations: Over the last decade or two, huge amounts of surplus income levels has led to an increase in the spending capacity of Asians. From indulging in premium brands to buying lavish homes, Asians have become highly aspirational towards most of the trends in the west. Over the last few years, an increasing number of Asian parents prefer to enrol their children in well known international universities. Though the US and UK remain as the preferred locations for higher studies, a growing number of students are opting to study within Asian countries like UAE(Dubai), Malaysia and Singapore. While choosing the right university is a given, finding a good, well facilitated and comfortable student accommodation is a top priority for parents as well as the children. Gone are the days of substandard hostels and crowded PGs, students and parents are now willing to spend on premium student accommodation that can offer all the facilities required for a comfortable living. These exclusive student housing accommodations provide high quality, secure, hygienic and well-designed student housing. They have been designed to improve the quality of a student’s life and provide maximum convenience and peace of mind to students and their parent.
· Asia as a Target Market for Western Universities: With a growing number of Asian students opting to study in universities within the continent, many western universities now consider Asia as one of their largest markets. To cater to this population, universities are ready to move closer to the Asian market to attract more students. For instance, Dubai has built a huge campus namely, Dubai International Academic City (DIAC), specifically to accommodate international universities. Since high-quality student housing has been a norm in western universities, they naturally carried this trend to the Asian markets. The real estate industry has been the largest benefactor of this trend for two main reasons – one, they bought or built large properties for their university campus and two, they built PBSA( Purpose built student accommodation) which exclusively catered to their on campus or off campus student living requirements.
· Recession Proof: Education is considered a recession-proof business and this has been one of the primary reasons for the industry to invest heavily in student accommodation. Secondly, student housing or PBSA (Purpose built student accommodation) has come as a breath of fresh air for the slumping Asian real estate markets over the last 5-8 years. Since most of these markets have an oversupply of homes, retail and commercial buildings, the industry was looking at newer opportunities to continue to develop their businesses. Along with the newly built PBSAs, there has been a huge amount of offtake of existing residential units which are used or managed as student housing.
Comfortable Living: The lifestyle of millennials are strikingly different from the predecessors. Students today look for quality accommodation that amplifies student housing experience. It’s no longer just about a room with a bed and regular meals. Millennial students look for housing with social spaces, recreation, dedicated entertainment, fitness activities and many more facilities that can give them a wholesome experience. On the other hand, parents today are ready to spend a few extra bucks to ensure a comfortable living for their children.
Highest ROI: Lastly, student accommodation historically has given the highest ROI in matured markets like UK & USA. Investors in Asia have taken note of this and are not shying away from investing heavily in this particular segment. Since education is a recession-proof sector, it makes business sense to do more of student housing projects. Secondly, the Asian markets now consider this new age real estate product as an asset class. For instance, a project in Sharjah by real estate developer is offering a fixed return of 10 per cent on investment for the first five years. Similarly in India, one can expect IRR of 18 per cent plus and An EBITDA of 35 per cent plus on student housing products.