Investors Are Still Going After Student Housing Properties, But They Are More Concerned About Prices
October 21, 2019 | Bendix Anderson | National Real Estate Investor
While investors continue to be eager to buy student housing properties, good deals are hard to find. “There haven’t been those massive portfolios that we saw in prior years,” says William Vonderfecht, co-leader of the student housing team for real estate services firm CBRE.
Few student housing portfolios are available for investors to buy right now. Stabilized properties within walking distance of campus are also few and far between. However, potential buyers have also become more picky. They are offering less money to buy properties in places with a lot of competition from new construction. That has pushed the average cap rate for student housing higher, despite steady demand, according to Dorothy Jackman, executive managing director of the national student housing group based in the Tampa, Fla. office of real estate services firm Colliers International.
Lots of demand, but market dynamics are changing
Demand for student housing properties is still high, but fewer sellers are bringing properties to market. That is because if they sold their student housing assets, these investors might struggle to find a higher-yielding alternative to invest their capital in.
“Owners with core pedestrian assets are holding onto them,” says Vonderfecht. “People are not willing to trade because these deals are so hard to duplicate.”
