INFRASTRUCTURE

US student housing investment at an all-time high

SOURCE: chuttersnap/Unsplash
It's a good time to be in student housing development in the United States as investment in the area reached a record high.

It’s a good time to be in student housing development in the United States as investment in the area reached a record high this year and prices per bed top US$90,000.

A new report from Real Capital Analytics (RCA), and reported by Education Dive, found that investors had “discovered” the sector in recent years causing it to swell over the last decade.

The influx in investment was, however, in line with a surge in the college-age population during that time. As this has now stagnated and enrolments are expected to plateau, RCA questions whether the current high prices can be maintained.

In an editorial analysis of the report, Senior Vice President of RCA Jim Costello explains that buyers active in this space are attracted to the growth in demand and have compressed capitalisation rates to record lows.

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Capitalisation rate – or cap rate, as it is commonly referred to – is the rate of return that is expected to be generated on a real estate investment property. It is a widely used measure through which real estate investments are assessed for their profitability and return potential.

With cap rates moving to such low levels, sale prices are now at record highs, pushing the prices per bed above the US$90k level.

It’s a good time to be in student housing development in the United States as investment in the area reached a record high this year and prices per bed top US,000.

A new report from Real Capital Analytics (RCA), and reported by Education Dive, found that investors had “discovered” the sector in recent years causing it to swell over the last decade.

The influx in investment was, however, in line with a surge in the college-age population during that time. As this has now stagnated and enrolments are expected to plateau, RCA questions whether the current high prices can be maintained.

In an editorial analysis of the report, Senior Vice President of RCA Jim Costello explains that buyers active in this space are attracted to the growth in demand and have compressed capitalisation rates to record lows.

YOU MIGHT LIKE

Capitalisation rate – or cap rate, as it is commonly referred to – is the rate of return that is expected to be generated on a real estate investment property. It is a widely used measure through which real estate investments are assessed for their profitability and return potential.

With cap rates moving to such low levels, sale prices are now at record highs, pushing the prices per bed above the USk level.