Rising Above The Pandemic — Resilience Of Global Student Housing
Looking back at the year that recently came to a close, we are made aware that the year gone by has had a host of ups and downs, across industries. If we look at the student housing sector, seemingly one would have predicted a downfall because of the pandemic. But a recent poll conducted by the British Council suggests that many Indian students have no plans of deterring their study plans in 2021. In fact, according to IDP Education Services Co.,Ltd, admissions for the fall semesters in many countries are open and applications are coming in from students across the globe. In a way, it makes sense. The Covid-19 situation is a glitch, yes, but that doesn’t mean that life should come to a halt. Many youngsters and their parents are of the opinion that you can go ahead with your study plans as long as safety and precautionary measures are in place.
Therefore, experts like Michael Bickford, CEO of Round Hill Capital, and Will Rowson, CEO of GSA — Global Student Accommodation have concluded that the coming fall semesters have great things in store for the student housing sector because the demand for student accommodation has remained the same, if not gotten higher. While no one is flying abroad for a vacation because that’s something you can put on hold, many students are braving the adversity and heading over to countries who have a good grasp on the Covid-19 situation — UK, Ireland, Spain, USA, to name a few. On the other hand, investors, too, are looking at student housing as a sector worth investing in because of the resilience it has shown in the past year. While there are short-term challenges like temporary loss of jobs, financial bottlenecks, and government restrictions, investors like CORESTATE capital and CBRE Group are certain that the long-term trend is looking upwards.
Across Europe, joint ventures and deals worth millions are going forward when it comes to investing in student housing. LA’s Ares Management Corp. invested a whopping $217 million on their first student housing property in the UK, and Malaysia’s Sunway RE Capital partnered with MBU Capital to manage a PBSA in UK worth £110 million. Banks are being flexible while giving out loans because they believe that investing in student housing will gain decent returns and there is very minimal risk involved. In Europe alone, investment in this sector reached €9 billion in 2020, and this only means that there are many more property listings in 2021. Fortunately, there is no tunnel vision, and everyone is able to see the bigger picture. So, while demand is in place, the sector is able to maintain its supply as well.
Today, the private sector owns 51% of the beds in the UK, as compared to earlier when the government owned the majority. This is another testament to the fact that private owned PBSAs are preferred by the students. Private equity firms collectively have around $300 billion that they want to direct towards property investments, and now want to look beyond hotels and offices, at student housing.
Bloomberg reported that some landlords in the UK were willing to bear a few losses in order to share the students’ financial burden. Also, for the same reason, prices of the accommodation dropped during the pandemic. These minor setbacks are not looked at as major concerns since investors are convinced that the sector will regain its glory very soon and long-term opportunities will present itself.
Even India, for that matter, is upping its game when it comes to student housing. According to @Knight Frank, 2019, the rising demand for student accommodation and the current lack in supply of quality housing, makes for a $50 billion opportunity for the PBSA sector. With a steadily growing economy and a large student population, the student housing sector in India is bound to be promising in the coming years. The coming fall semester has a lot of positives for the PBSA sector worldwide. USA, UK and Europe are at the top of their game with regards to restoring normalcy in the universities, thereby clearing the path for the student housing sector.
