Mumbai: The student housing sector is worth $200 billion globally, according to a new report by Jones Lang LaSalle’s Inc (JLL), one of the world’s largest real estate service companies.
The report, released on Thursday, attributed the figure to an increase in the number of students from Asia choosing to study outside of their home country.
The report said Asia has increased its market share as a source market for international students from 48% in 2004 to 52% in 2009. In fact, the top-five source markets globally are China, India and South Korea, followed by Germany and France.
Philip Hillman, lead director, Student Housing and Higher Education, JLL said in a media release, “Strong economic growth in the key Asian markets has fuelled higher education enrolments globally. Over the past decade, countries like China, India and Vietnam have experienced rapid growth in the wealthier middle class, which has spurred demand for higher education and better housing options in destination countries.”
According to the report, globally, study-abroad student numbers are expected to increase from around 165 million today to 263 million by 2025. Market transaction volumes worldwide for the year ending June 2012 were $4.7 billion, with more assets trading above $50 million, showing healthy investor appetite for this asset class.
While ownership of student housing has traditionally been dominated by developer-operators, increasingly, equity funds, sovereign wealth funds, pension funds, investment managers and REITs are entering the market.
“Student housing is one of the most vibrant Indian real estate markets in the foreseeable future,” said Anuj Puri, chairman and country head, JLL India. “Dense student populations that exist around prominent colleges positively affect the demand for residential spaces as well as restaurants and small retail spaces. As such, educational institution lend value to a location.”
In fact, the future of this sector in India is extremely promising.
“The country’s top 10-15 corporate schools have plans to develop a total of 800–1,000 schools over the next decade, aiming to deliver quality education to far-flung parts of the country,” said Puri.
According to Puri, the corporate higher education industry is expected to build close to 10 million sq. ft of educational institution space over the next few years—and this does not include the rapid expansion plans that are under way to build new IITs, IIMs, SPAs and other reputed educational institutions. “The demand for the right kind of student housing that such a scenario presents can well be imagined,”said Puri.