The Real Estate Investment Network (REIN) is releasing the inaugural REIN’s University Effect: A Report for Rental Housing Providers, describing for the first time how university campuses influence real estate rents, prices, values, and investment potential upward.
“What makes this report ground-breaking is its ability to help investors make the most out of the colossal demand for student housing while also highlighting the role millennials are playing in this huge niche market. It may be a challenge for some, but it is definitely an opportunity for astute investors to strengthen their portfolio and protect it from risk and devaluation in weaker or unstable markets,” says Don R. Campbell, Senior Real Estate Analyst for REIN.
According to the report, average house prices increase by one per cent for every kilometre closer to a university. This is due to high student housing demand especially within 400 metres, or no farther than a 30-minute transit commute, from a university campus.
REIN states that public post-secondary institutions in Canada currently have insufficient facilities to accommodate majority of its students with most universities allotting their already limited housing supply to first-year students.
The report illustrates the widespread lack of student housing across the country stating “[a] mere three per cent of Canadian university students live in purpose-built, off-campus housing. Therefore, 97 per cent need housing in the public rental pool.”
In 2018, Canadian post-secondary students exceeded 1.5 million and enrolment rates are still rising, especially among international students. International student enrolment rates increased by 52 per cent in the same year, while Toronto, Montréal, and Vancouver share more than half of its student pool.
“Canada has a growing reputation as a safe and welcoming country with excellent yet affordable post-secondary education, and the federal government is increasing its reach to foreign students,” says REIN.
“REIN’s research effectively decoded the University Effect by explaining exactly what makes student housing tick based on a thorough understanding of its economic fundamentals as described in REIN’s Long-Term Real Estate Success Formula. What’s more interesting is the fact that millennials make up most of the student population whether domestic or international and this is good news for rental housing providers interested in meeting the unique housing preferences of this influential generation,” says Jennifer Hunt, Vice President of Research and Events, REIN.
The report suggests a variety of tips for rental housing providers to meet the needs of students. “Gone are the days of utilitarian amenities and sparse furnishings. Current student housing demands are now all about lifestyle including resort-style living with free coffee in the lobby, granite countertops, hardwood floors, and stainless-steel appliances, bathrooms attached to every bedroom, roof-top patios with barbeques, and outdoor pools,” says the report.
REIN also introduces two new methodologies – REIN’s University Hot Zone and REIN’s University Goldmine Scorecard – which investors can use to determine whether student housing is ripe for investment potential.
The University Hot Zone serves as a filter to screen which universities qualify for an investment “hot zone” and therefore warrants further research. REIN’s University Goldmine Scorecard is a thorough checklist to help investors decide on whether to enter the student housing market in a specific area close to a university.
REIN applied its University Hot Zone to a number of Canadian universities and the ones that passed, meriting further diligence for potential investors, include:
University of British Columbia – Okanagan (UBCO)
Simon Fraser University – Surrey & Burnaby Campuses (SFU)
University of Alberta (U of A)
University of Calgary (U of C)
University of Lethbridge (U of L)
University of Saskatchewan (U of S)
University of Manitoba (U of M)
University of Ottawa (U of O)
University of Toronto (U of T)
University of Prince Edward Island