Redesigning spaces for students in India

March 11, 2019 / By  

Students’ woes continue even after completing their university admission, especially as they embark on the search for a suitable accommodation. This is particularly so for those who migrate to a different city or town to pursue their education. Capacity constraints of student accommodation for the total intake forces students to scout for options outside their campuses. Taking advantage of this situation, real estate brokers and house owners have led the emergence of an unorganised market for student housing in India. While these housing facilities are typically rented at a significant premium, they lag behind in terms of providing a well-designed and well-equipped accommodation.

As the private education sector grows, the number of universities are increasing and existing institutions are also being refurbished, adept with latest technology. Hence, there is a need to create an ecosystem, exclusively for students that can provide a comfortable, safe and seamless housing and learning experience.

There are nearly 37 million students pursuing higher education in India, of this an estimated 11 million migrant students seek accommodation. Only one-third of these students are accommodated in campus hostels provided by the institutions while the remaining 7 million have opted for, and consequently, fueled the growth of informal housing models. These are typically in the form of residential paying guests (PGs), rental housing and private hostels. To keep up with the growing demand, residential complexes are also being converted into student housing accommodations by organized service providers.

This situation presents an opportunity for developers who seek to invest in alternative asset classes for product diversification and ultimately better returns (yield and capital appreciation). While rental yields have stagnated at 2-3% in residential real estate, student housing presents attractive returns at 13-14% at a lower risk, with a potential upside in the case of premium housing. This is on the back of a huge unmet demand for student accommodation and absence of a standardized framework for a holistic student living.

With gross enrolment ratio (GER) expected to reach 30% by 2020-21 from 26% in 2017-18, the number of students in the higher education segment is expected to increase to 43 million. Given the continued capacity constraints within campuses, the unmet off-campus housing demand in India is likely to burgeon to more than 8 million by 2020-21.

Figure 1 – Increasing demand for student housing
Source: JLL Research, All India Survey on Higher Education, Ministry of Human Resource Development
E-Estimated by JLL Research F-Forecasted by JLL Research

Developers and investors have already begun to capitalize on this impending opportunity and are targeting top educational hubs in metros and Tier I cities. At the same time, the sector is plagued with issues relating to procurement of land (mainly in major cities), absence of development regulations, and lack of university support. Thus, there is an urgent need to create a regulatory framework that will ensure the establishment of collaborative business models for the growth of this segment.

Notify of

Inline Feedbacks
View all comments

Talk to us 
about real estate markets.