[UK, 25/05/2023] In 2022, the student housing industry demonstrated its strength as more students returned to campus and resumed in-person classes. Rent growth remained strong, with Yardi's latest research report showing that 96.6 per cent of beds at 200 academic institutions were pre-leased as of September.

High Student Housing Demand

Although high-interest rates and rising inflation affect the housing market, the student housing sector continues to experience high levels of transaction activity. Additionally, there is a strong pipeline for new supply in the market.

High Renting Rate

Although there was market uncertainty earlier this year, the sector has been doing well, with rental rates continuously increasing. Notably, there has been a significant improvement in student housing performance over the past year, as seen in the increased pre-leasing velocity and rent growth. Compared to previous years, students now rent at a higher rate and pay more rent.

Major Players Increasing Student Housing Footprint

In 2022, Landmark Properties and Abu Dhabi Investment Authority joined forces twice to expand their student housing reach. Blackstone bought American Campus Communities for $12.8 billion, acquiring 166 new properties in 71 U.S. markets. These partnerships and acquisitions contributed to a successful year for major players in the market.

Positive Investments

Experts predict that student housing will remain a good investment this year. However, there are challenges for Tier 2 and 3 universities due to the imbalance in enrolment, with larger academic institutions taking in more students. Highly selective universities with well-known names receive many applications, while less selective schools and community colleges receive fewer.

Enrolment Growth

In the next few years, the purpose-built student housing supply is expected to settle at around 25,000 beds, 60 per cent of the usual amount. However, this supply level isn't enough to meet the demand caused by enrolment growth, consumer preference changes, and ageing existing inventory. Despite this, it could lead to continued success in the top-tier markets and sustainable cap rates.

Market Optimism

Experts are optimistic about the student housing market, given its strong performance in recent months. Investors are also showing interest in this sector due to its impressive growth. The total transaction activity has almost reached last year's record levels, with $3.9 billion in sales volume by September. Although multifamily housing is more competitive, student housing remains attractive due to high growth prospects.

About HOP Ltd

HOP offers lettings, sales, investments and block management. It is dedicated to renting properties with a modern and personalized approach, offering a diverse selection of accommodations throughout the city. Its goal is to simplify the moving process and make it hassle-free. For more details, visit https://www.hop-property.co.uk.