Purpose-Built Student Accommodation (PBSA) Segment will Continue to Scale Growth Chart

The Indian student housing segment will continue to soar as schools & colleges have started to reopen. Presently, there are over 40 million college-going students in India, which is expected to reach 140 million by 2030.

It is estimated that presently around 12 million students fall within the migrant category. In India, there is an increasing trend of cross-state migration in terms of higher education. The state of UP, followed by Maharashtra and Karnataka is among the top three educational markets in the country.

In terms of educational hubs, Delhi, Bangalore, Pune, Noida, lead the list of educational epicenters in India. Besides large cities, India has witnessed numerous tier 2/3 cities emerging as regional coaching and training hubs. Cities and towns such as Kota, Coimbatore, Vizag, Patna, Ranchi, Bhubaneshwar, etc. are vibrant student markets due to the growing concentration of coaching centers.

Around 20% of universities in India have on-campus housing and hostel facilities. The scope of on-campus hostels and student accommodation is limited due to a lack of available land space and the high investment costs involved. Consequently, a large portion of the accommodation for students is run by unorganized players; mostly PGs, private hostels, and shared apartments.

Living standards are generally not up to the mark in such spaces. There is a shortage of hygiene and sources of entertainment. Moreover, students have to get electricity, water, and gas connections themselves, which further makes their lives cumbersome.

Meanwhile, there are a growing number of parents with higher disposable income who want higher standards of living for their loved ones. This gives a great headspace for the organized Purpose Student Built Accommodation (PBSA). It can give a more comfortable, value-driven alternative to the expansive but unorganized student accommodation market in India.

Pressing Need for Purpose-Built Student Housing in India

The PBSA market in India is set to soar. Backed by a growing middle class and a rise in per capita income, there is a pressing need for hygienic, community-driven student accommodation powered by advanced facilities. In the name of student housing, people do not need merely a bed space and study table. Rather, they need more furniture, improved interiors & ambience, and higher standards of cleanliness & overall hygiene.

Likewise, there is also a growing requirement for well-designed community spaces that can nurture healthy interaction and instill a sense of community amongst the resident students. It is a stark contrast from the past, in the name of community space, a student PG meant a dining area (and sometimes a common area to watch TV.). Today, students want lounge areas, high-speed internet zones, gaming areas, and much more within the premises.

By adding new layers of services, the PBSAs can also tap into another powerful demand driver, the bachelor working population. Many bachelor workforces would prefer to live in such co-living spaces.

Enriching Road Ahead

The road ahead is enriching for the Indian PBSA sector, which though still small, is set to grow fast. PBSA is already a popular concept in global metropolises such as New York, London, Frankfurt, Warsaw, etc. Soon, Indian cities can also join the bandwagon.

Presently, there are close to 1.5 million students in the segment. However, this can reach up to 8 million in the times to come. In addition to metros, the segment can deepen its foothold in tier 2 and 3 cities as well. As per the research by 360 Realtors in the past, the PBSA segment in India will grow by 9% CAGR.

The sector will also give rise to new business models and create parallel stakeholder engagement models.

There will be a growing demand for student housing operators and management companies. These companies will be entrusted to manage existing student hostels more professionally or develop new projects from scratch in upcoming universities and educational institutes. While the role of the university will be to take care of the occupancy, the entire development, operation, and management will be done by the professional agencies.

The expansive PBSA market in India will also steer commercial activities in the unsold housing inventories. Many unsold properties, which are located strategically within the student hubs, can be systematically transformed into student housing units.

This segment is a high potential category. By carefully investing in the emergent PBSA market in India, one can make returns to the tune of 9-11% annually, which is higher than other popular categories.