The business of student housing is booming. As more and more young people choose to go to university or college, the thesis is that student housing will enjoy structural growth and that the prime locations right near campus will be great investments. Unsurprisingly, like in so many other industries, the deep-pocketed private equity funds have sniffed an opportunity and are moving in.
Last year, the world’s largest private equity firm, Blackstone, paid $12.8 billion to acquire American Campus Communities, the largest developer and manager of student housing in the US. This added another 112,000 student housing beds to Blackstone’s portfolio. This was just the largest deal in a banner year for the student housing industry – with investors spending $22.9 billion in the United States alone.
This article from Business Insider has taken a look at student housing in America and examines what happens when Wall Street takes on the operation of student accomodation. No prizes for guessing what comes next.
- A study by the National Multifamily Housing Council found that rent for student housing jumped 25% between 2013 and 2020 when adjusting for inflation, which outpaced tuition hikes.
- Moody’s Analytics recently warned of an “affordability crisis” for college students, noting that since 2019, rents for student housing in a sample of notable college towns had grown faster than those of regular apartments.
- The start of the 2022 academic year brought “never-before-seen rent growth” for student housing, RealPage Market Analytics, a real-estate-software company, said.
This story has echoes of the housing story we’re living through in Australia at the moment – massive shortage of accomodation is seeing record low availability which is driving up prices. Currently the only solution being discussed is to build more. But as we recently explored on The Dive podcast, it’s nearly impossible to build your way out of a housing crisis.
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