Real estate companies are still heavily invested in student housing projects, despite upcoming changes in demographics and imbalanced inventory in certain markets.
As of July 2018, real estate fund managers raised $1.9 billion for student housing projects around the world, matching the total amount from 2017, according to data provider Preqin, Bloomberg reports. With the growing flow of capital surging in, two polar markets have been created, the over- and under-built. Sam Bernstein, founder and chief executive officer of online student housing listing platform LoftSmart Inc., explains, landlords “could light the places on fire and people would still have to live in them,” in tight-supply markets such as University of California at Berkeley, while in markets with greater supply, the value of the investment can vary greatly by location.
Landlords that pick good properties and operate them well say there are some broader trends in their favor. Undergraduate college enrollment is projected to grow to about 17.4 million students by 2027, a 3 percent increase from 2016, according to the U.S. Department of Education. Many public universities are also looking to tap the private market to meet the housing needs of students, so they can devote resources to other priorities. One recent proposal from the University System of Georgia would have a private company maintain more than 12,000 beds at five schools around the state.
