Student Housing Poised for Further Growth
January 24, 2023 | Joyce Guevarra & Karl Angelo Vidal | S&P Global Market Intelligence
Transaction volume in the U.S. student housing sector grew 64% to a record $18.9 billion from the previous all-time high of $11.5 billion in 2021, according to JLL Capital Markets research.
The sector is gaining interest from international investors that have grown their holding to 20% market share from 2017 to 2021, or equivalent to $10 billion of investments. In comparison, cross-border capital only held 6.7% of market share from 2012 to 2016, the analysis showed.
Buyers from the Middle East, Singapore and Latin America are becoming active investors in the space.
Both domestic and foreign investors target student housing properties because they consider the assets recession proof, as leases have parental guarantees and enrollment has historically increased during economic recessions, JLL said.
The sector is expected to retain momentum and see yet another strong performance in 2023, according to Yardi Matrix’s National Student Housing Report, which includes over 2,000 universities and colleges nationwide.
Roughly 48% of beds at Yardi 200 universities, which are investment grade universities across all major collegiate conferences, were already leased for the fall 2023 school year as of December 2022, and rent growth was strong at 4.7% yearly. Supply, on the other hand, is being impacted by rising interest rates. This has caused contraction in the development pipeline, which includes planned, prospective and under-construction properties.
