There is only one hostel bed available for every six students enrolled for higher education in India. The student housing industry, therefore, sniffs a great opportunity. Their confidence also stems from the fact that people now want to spend more for a higher standard of living. The unorganised paying guest (PG) market is ripe for disruption.
A new report by the Student Accommodation Provider Association of India (SAPFI) and consulting firm CBRE, paints a bright future for the organised players. The report titled 'The Herald of a New Chapter: Student Accommodation in India' states that the student housing/co-living sector is expected to witness an investment worth $700 million and an addition of 0.6 million beds by 2023 across the country. Here are some key takeaways:
- How is the organised student housing segment different from PGs? The report states that the difference is primarily "because they are tailored to suit end-user needs. It has relatively flexible lease terms, lower security deposits, shorter lock-in periods and less stringent house rules and regulations. It also offers housekeeping and daily maintenance services".
- The student housing segment is on a rapid growth trajectory across the country and could witness a growth of 36 per cent between 2019 and 2023. Currently, the top 30 players in the student housing/co-living market have a cumulative stock of more than 250,000 beds (as of August 2019).
- Student enrollments in the country have increased from 32.3 million in 2013-14 to 36.64 million in 2017-18; the government is targeting a gross enrolment ratio (GER) of 30 per cent by 2020-21, which is good news for the sector - it would result in higher demand for housing. The report states that "larger states such as Uttar Pradesh, Gujarat, Maharashtra, Karnataka, Rajasthan, Madhya Pradesh, Tamil Nadu and Andhra Pradesh account for a major share in colleges across the country. Most of these states have witnessed a steady pace of student enrolment in the last few years. Consequently, cities such as Bangalore, Jaipur, Hyderabad, Pune, Nagpur and Mumbai housing prominent educational institutions have emerged as educational hubs".
- The students housing operators, meanwhile, are spreading their wings beyond the metros and bigger cities. The report states: "Most of the operators in co-living/student housing are not only active across major cities but also have a presence in educational hubs such as Dehradun, Jaipur, Chandigarh, Indore, Vadodara, Jalandhar and Kota. These cities have a greater number of migrant students than most other cities, thus marking their scope for student accommodation".
- Investors in the co-living sector include prominent names such as Warburg Pincus, Sequoia Capital, Goldman Sachs, and HDFC amongst others. Warburg Pincus and Lemon Tree Hotels have entered into a JV called Hamstede Living. The initial investment in the company is over $200 million.
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