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Why Investors Want Student Housing

Invest Student Housing

Digested from CoStar

For many, the student sector offers safety in uncertain times. Find out why the big money is placing a bet on off-campus housing.

While Greystar and Blackstone teaming up to buy Education Realty Trust stole the headlines, institutional interest in the student sector is nothing new.

What’s driving this trend? CoStar’s John Doherty attributes it to a desire for safety. After years of avoiding the risks in student housing, investors suddenly feel comfortable with this more management-intensive sector.

“But now with institutional money making big bets on student housing, investors appear to be willing to take on the additional management requirements in the belief that student housing—especially large properties located near the campuses of major public universities schools—will weather a future downturn better than other rental properties,” Doherty writes.

One of the big reason investors feel comfortable with the student asset class is demand. The number of students is rising at many schools around the country.

“Enrollment at big state universities, such as the University of Texas’ campuses, University of Arizona, and elsewhere, has continued to grow, even as states have restricted funding and schools have cut back on dormitory construction,” Doherty writes. “Meanwhile the amenity-laden private properties built by developers have become more popular with students.”

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