REIN’s ‘University Effect’ decoded: Premium rents, prices and investment potential within 400-km radius from campus, study shows
Gone are the days of toga parties and pizza boxes on the lawn. International and graduate student numbers are increasing across Canada, but student housing beds are not. Students seek quality housing. You can be their solution.
Vancouver, BC: 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. The report further suggests that REIN’s ‘University Effect’ exerts the greatest impact on real estate the closer the property is to a specific university or post-secondary institution.
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.
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,” the report suggests.
In 2018, Canadian post-secondary students exceeded 1.5 million and enrolment rates are still rising especially among international students. In fact, international student enrolment rates increased by 52 per cent in the same year. More than half of the international student pool is shared by Toronto, Montreal, and Vancouver. Further, 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.
“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.
“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.
The report lays out creative tools, tips, and tricks 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,” the report adds.
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 on the other hand 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 here are the ones that passed, meriting further diligence for potential investors:
- 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)
- Carleton University
- University of Toronto (U of T)
- University of Prince Edward Island
About the Real Estate Investment Network
REIN was founded in 1992. It is Canada’s most trusted source of real estate investment education, analysis, research and strategic leadership. It offers a platform and environment where its clients have transacted more than 39,300 properties, representing more than $5.1 billion of real estate holdings.
REIN delivers balanced and impartial research and economic insights integrated with relevant analysis. It brings critical information, opinions of industry thought leaders, and proven strategies of success together in a way that homebuyers and investors can use to make the right decisions on where, when, and why to invest in real estate.
REIN sees a bright future for the Canadian real estate marketplace. Its clients, armed with current and insightful research, and provided with strategic guidance and help from an exceptional like-minded community, are set to continue to thrive and achieve their personal investment goals.
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Real Estate Investment Network