Investing in student housing

Investing in student housing

It’s a seller’s market. Investors are pouring money to the student housing company as new buyers enter the marketplace. In the year 2014, the new buyers filled in for the biggest real estate investment trusts, that have been briefly not purchasing properties after a bad earnings news hurt their stock costs. Now in 2015, the REITs have delivered, driving property costs for student housing even higher. Costs for student housing are beginning to look high even compared to costs for apartment properties overall, comparable to the income from all these assets. That’s a large change from 2014, when the top the home REITs, EdR and American Campus Communities, purchased only some of properties, accounting for only 3 percent of transactions.

Investing in student housing

An extensive list of new investors also have joined the race for student housing assets, including high net-worth individuals, private equity fund managers and institutional investors read more information about private equity fund by clicking here. Cap rates in the sector averaged only 6.1 percent in the first quarter, based on data company Real Capital Analytics. That is down from 6.6 percent the year before. Cap rates happen to be at 6.1 percent for the last 3 quarters, the lowest level since the economic crisis. Investors utilized to pay less for gannon student housing attributes compared to what they did for apartment buildings comparable to the income from the qualities. The average cap rate of 6.1 percent documented for student housing qualities in the first quarter is only 20 basis points higher compared to the 5.9 percentage average cap rate that investors taken care of multifamily properties overall, according to RCA.

Other data firms show comparable results. Cap rates for student housing attributes were 6.2 percent on average in the year 2014, 60 base points less than the previous year, according to ARA Newmark. That is only 15 to 20 basis points higher compared to the average cap rate for apartment attributes. The total number of operations is slightly and the average sales cost per bed also grew by about $3, 000, from $48, 000 on average in 2013 to $51, 000 in the year 2014.