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Student housing sector set to boom further amid growing enrolment



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While the residential real estate sector has slumped in the recent past, the student accommodation sector has been booming.

There is a surge in demand which is being driven by huge student enrolment numbers.

Student accommodation is housing that has been designed specifically to meet the demands and requirements of the modern-day student, explains Bryan Gitia, real estate investment analyst at Cytonn Real Estate.

The concept has gained much traction globally and has become a mainstream investment class asset gaining more attention from institutional investors especially in developed European markets and the United States.

In Kenya, the concept is also gradually becoming popular as the demand-supply gap between student accommodation and student enrolment continues to widen every year.


Student housing has become an attractive investment class in its own right, Mr Gitia says.

According to Knight Frank’s Global Student Property Report 2019, globally the market has grown from a portfolio of Sh250 billion as at 2007 to Sh1.7 trillion as at 2018.

The growth has been driven by a number of reasons, including attractive returns.

Locally, student accommodation continues to deliver relatively high returns and consistent rental income to investors in comparison to other asset classes, which tend to fluctuate with prevailing real estate cycles.

“Currently, all universities in Kenya are experiencing an acute student housing shortage. The existing capacity is limited and new developments have ultimately not kept pace with the growth in enrolment,” Mr Gitia points out.

According to the Ministry of Education, available student housing in Kenya stands at 300,000 against a university enrolment of 520,900 as at 2018, excluding technical colleges.

According to Cytonn Research, on average, the majority of higher institutions in Kenya, therefore, only cater to approximately 22.6 per cent of their student population, having looked at various tertiary institutions, their on-campus hostels capacity against their student enrolment.

“Assuming that 10 per cent live at home, this means private investors are left to cater for at least 67.4 per cent, which translates to over 350,000-bed spaces,” he says.

Similar to affordable housing, the majority of the private student housing stock lacks in quality and amenities that are expected of student accommodation.

Acorn Holdings, a joint venture between Acorn and UK-based Private Equity firm Helios, is currently the leading purpose-built student accommodation player in the Kenyan market, trading as Qwetu and Kejani, having developed 1,572 rooms with 2,313 beds as at 2020.

In November 2019, the firm issued the first Kenyan green bond on the international Securities Market of the London Stock Exchange (LSE) raising 85 per cent of its Sh4.3 billion target, affirming that Kenya is indeed an attractive market for foreign investors.

The medium-term note (MTN) program will be used to finance the construction of green-certified student properties, to create quality and affordable accommodation for 5,000 students in Nairobi. Currently, the firm has upcoming student housing projects on Thika Road, Athi River, Kilimani and Waiyaki Way.

Unlike in the developed matured markets where the student population is expected to dip, Kenya’s market is still nascent. At present, the rapidly growing student population in universities and vocational centres remains favourable to investments.

According to Kenya National Bureau of statistics 2019 Economic Survey, student accommodation stood at 796,000 units in 2017/18 and was expected to grow by 15.5 per cent to 919,400 in the 2018/19 academic year.

The numbers are set to increase as the university/college age demographic continues to grow. According to the 2019 census data, the number of 18-24 year individuals, which represents college-going population, came in at 6.4 million, representing 13.4 per cent of the total Kenyan population of 47.6 million.

Unlike residential housing which is easily swayed by market forces, student housing tends to provide an hedge against economic headwinds. It is an area that has proven to be resilient especially during economic downturns as well as the usual real estate cycles.

“This is as student enrolment increases every year despite the prevailing economic climate, and even tends to spike during economic downturns as more people seek to diversify their skillsets,” Mr Gitia explains.

Globally, an expanding middle class will see the demand for quality student accommodation soar higher.

According to the World Economic Forum, every year, 140 million households globally move into the middle-income class and another 20 million move into the high-income bracket.

This increases their expenditure on basics such as food and housing by 225 per cent on average and on services such as healthcare and education by 350 per cent.

“The growth in disposable incomes leads to student mobility as more people seek quality higher education, creating more markets for student housing,” he adds.

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