For the developer and property manager, the rental market performed well in 2019, with strong demand across Canada. While purpose-built rentals have continued to rise, student housing continues to struggle.
There are more than 1.5 million full-time students enrolled in universities and colleges across Canada. However, many are finding it tough to find affordable rentals. In red-hot markets like Vancouver and Toronto, students have lined up with 40 or more people to view a bachelor.
Across Canada, there are a mere 121,164 on-campus beds and only 39,000 purpose-built, off-campus student rental beds. Student housing demand is now in excess of 416,000 beds.
As the more than 700,000 international students opting for Canadian universities continues to grow, it’s only likely to get even more competitive. These students pay significantly higher tuition fees than domestic students and are typically wealthier than average. Approximately half of these lucrative market students call Ontario home, while BC welcomes 24%, Quebec takes 12% and the Prairie provinces house 11%.
According to the Real Estate Investment Network, Canada lags years behind other countries when it comes to developing off-campus purpose-built housing for student. Jennifer Hunt, REIN’s vice-president of research and events has been quoted as saying, ““When you look (at the data)… three per cent of Canadian university students live in purpose-built off-campus student housing compared to 10-12 per cent in the U.S. and Britain respectively”
Historically, the limited funding to Canadian universities has hampered their ability to create on-campus student housing, leaving the vast majority of students to look for apartments, condos and off-campus student housing.
Because privately operated, purpose-built off-campus student residences are the most attractive type of off campus housing for students. Student expectations have changed, and this demographic is looking for modern amenities, communal spaces and the ubiquitous wifi. In recent years, there has been a surge of investors and developers converting hotels into student housing.
This represents an opportunity for developers and investors. And, many Canadian investors are taking note. As of January 2019, an estimated 51,747 purpose-built off-campus student beds were available or were being built across Canada. Even so, many markets will fall desperately short of purpose-built student housing.