Student Housing: the Hottest Real Estate Investment

Multi-tenant rental properties are big, according to a Business Wire press release announcing this latest in real estate trends. What makes student housing in the U.S. so lucrative? It is not simply the ease of renting out student spaces to a captive student audience in need of four walls and a roof each school year. The changing nature of student demographics and preferences is now skewing toward a wealthier market, courtesy of state funding cuts and ever-inflating college costs that are driving up student-housing on the “want list” of successful investors.

Forget drab dormitories

Luxury apartments are where it’s at, with students in search of buildings close to campus with added security, as well as on-site management and an array of amenities like fitness centers and swimming pools. Supporting the trend? Parents who don’t seem to mind throwing their kids a little extra green to maintain their usual lifestyle.

Ditching declining enrollment concerns

Despite declining college enrollment, the right type of properties offer success, specifically buildings close to campus at top-tier schools that aren’t suffering the same enrollment pressures of smaller community colleges and four year schools.

Who’s taking advantage?

Tons of funds are taking advantage of this attractive investment, including:

• Canada Pension Plan Investment board, Canada’s largest, single-purpose investment fund.
• GIC Private, Ltd., a Singapore foreign reserves firm.
• Scion Group, a leading investor in student housing with a student-housing portfolio worth $1.4 billion.

Why the glass is half-full

Reps from GIC and the Canadian fund both issued statements that strong performance, driven by continued enrollment growth in major universities, combined with a limited supply in targeted U.S. student-housing markets, makes the industry an attractive bet, especially given its positive fundamentals and potential.