Student accommodation: Is there a gap in the market?

The number of universities and colleges in Dubai is increasing. The question is whether there are enough facilities or accommodation to
cater for the growing number of students.

The two main areas where universities are located in Dubai are the Academic City and Knowledge Village. With 42 per cent of Dubai’s student population being non-nationals, it is likely that many require suitable housing options in either the private rented sector or in dedicated student accommodation segment. Emirati students, who wish to live away from home while at college, create additional demand in this sector.

Demand for student accommodation is based on preferences such as room type, location, fit out of the property and more importantly, budget. An 8.5 per cent annual growth in student numbers has created a strong demand for student accommodation. According to a ValuStrat report, mostof the universities in Dubai that provide on-site accommodation for students cannot meet the demand. Oncampus accommodation caters for only 10 per cent of the total student population in Dubai. Such accommodations are taken by students, who prefer to reside in close proximity to their place of study and within easy reach of ancillary facilities such as libraries, restaurants and sporting amenities.

In universities in Dubai, fees for on-site college accommodation are generally equivalent to 50 – 100 per cent of the student tuition fees, making it difficult for most students to afford on-campus accommodation. Our research found that 37 per cent of students in non-federal institutions opted for private accommodation close to universities, or at least in an area easily reached by bus, taxi, metro or just a stroll from campus.

For a private accommodation, a student pays around Dh 20,000 annually, inclusive of basic furniture, white goods, and utility costs, sharing it often with friends or partners to split the rent. Shared private accommodation, mostly apartments, however, runs the risk of not having official rental agreements and the Real Estate Regulatory Agency (Rera) contract. This may also lack appropriate building management.

While we clearly see that there’s a strong demand for affordable, practical and conveniently located student accommodation in Dubai, Uninest is the only private purpose-built student accommodation currently available in the city, apart from universities that provide accommodation for students, ValuStrat research found that the majority of international students, who live in shared accommodation in Dubai, prefer en-suite double rooms, with shared living space, cooking facilities and laundry. High speed wifi is also a top priority.

Charging students reasonable fees, say Dh20,000 to 40,000 each per academic year for a shared room, should be in line with market expectations. On the downside, there can be problems with occupancy during summer and other out of term periods. However, accommodation providers can help mitigate against these voids and generate additional revenues by providing rooms for low budget travelers, charging attractive daily rates of Dh150 or weekly rates of Dh750 per person, which is subject to Department of Tourism approvals.

As an asset class, student accommodation can be lucrative to property investors. In the UK for example, student housing located near leading universities has become a common investment in the last ten years, as private and institutional investors are attracted to this safe and secure asset class generating relatively higher yields.

As Dubai has become one of the global hubs in trade, tourism and education – with 20,000 more students expected by 2020, it’s time for
developers and investors to take notice of the current gap in this sector and cater for the upcoming demand.

Source: Haider Tuaima, Special to PW

The author is Research Manager, ValuStrat


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