March 24, 2018

Student Housing Just Got a Jolt

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Student Housing Just Got a Jolt

Investors are once again being lured to student housing properties. Purchases of student housing properties slowed considerably in 2017 after a record high in 2016, but the sector is showing another rebound in 2018.

“Now, we are busy like we were in 2016,” says Travis Prince, executive managing director of Colliers International, a student housing real estate services firm.

Student housing properties are particularly gaining traction among investors because they tend to be viewed as a steady investment, able to retain their value in good or bad economic times.

“We have seen stable revenue performance throughout the last recession and through this expansion cycle,” Jaclyn Fitts, director of the national student housing service with real estate services firm CBRE, told the National Real Estate Investor.

Seventy-five percent of investors recently surveyed by CBRE said they expect to increase their student housing investments in 2018.

In 2017, the student housing sector plunged 21 percent compared to the year prior but that was following a record-breaking year. Perspective is key: The sector still remained at a historical high in 2017. Last year, investors spent $7.7 billion to buy student housing properties, the second highest ever for sales after 2016, according to Real Capital Analytics.

“[For 2018,] we continue to see equity flooding into the space,” says Fitts. “Even though this is our typical slow time, we continue to see people looking for assets.”

Investors also have been eyeing older student housing properties that are further from campus.

“There is demand for those properties too,” Fitts says. “There are students who can’t afford to live at new, pedestrian properties. They seek affordability.”

Source: “Buyers Return to the Student Housing Sector,” National Real Estate Investor (Feb. 23, 2018)