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 IHSABUJA 2020

UAE developers chase their dreams with student housing

Dubai: Sprawling campuses filled with the buzz of the young and their dreams – UAE’s higher education certainly has got what it takes to be a self-contained space within the wider real estate sector.

But take a closer look: Where are all the student housing that form part and parcel of any university town/city?

Well, they are on their way.

In Sharjah, the developer Arada is creating an area at its Aljada development for a 12-building cluster designated and sold as student housing. The “Nest” project, scheduled for completion next year, will create 2,415 apartment units and 3,819 bed spaces.

Picking a spot right next to Sharjah’s University City hub has certainly played well for Arada. But it’s an investment choice that very few developers in the UAE have chosen to take – student housing clearly has not been a priority area.

According to Shimmy Mathew, Chief Financial Officer at Arada, that’s an opportunity being missed out on.

“It is now a global asset class in its own right… although maturity in the sector differs vastly.

In many parts of the world, student housing has switched from being a specialist area of investment and gone straight into the mainstream

– Shimmy Mathew, Chief Financial Officer at Arada

“For example, the UK’s purpose-built student accommodation (PBSA) is now able to service 34 per cent of the country’s student population, a healthy figure given that many students wish to stay in onsite university accommodation or private residences.

Took its time to pick up

In the UAE, it’s in the last 10 years that more opportunities opened up in the higher education space. Development of University City in Sharjah and Dubai’s International Academic City have brought in more students from overseas and who do not have relatives to stay with.

It is for this user group that the UAE’s student housing is being built for.

The introduction of the new visa reforms is expected to increase international student enrolment, which will in turn stimulate demand for additional student housing within Dubai.

The numbers are there

In the 2018-19 academic year, the total number of students who got into higher education streams in Dubai was estimated at 53,200. Of these, expat students represented 66 per cent of the total, according to CBRE.

But, not all of them require student accommodation? Many, especially Indian expats have their parents/family here and are likely to stay with their families for economic and cultural reasons.

Dubai International Academic City (DIAC) is expected to have the highest number of new rooms, around 3,000 rooms, by the end of this year. These developments are backed by both local and overseas investors. (As of last year, existing supply for student housing in Dubai was estimated at 5,200 beds from around 20 projects, mostly in DIAC, Dubailand and Dubai Media City.

Create its own base

Can Sharjah replicate what Dubai has achieved so far? Arada’s Nest remains a pioneering venture in that respect.

Mathew reckons this is eminently doable. “If we look at Dubai, there are just four PBSA complexes, either completed or planned, that we are aware of, the largest of which has just over 1,800 rooms and which is due to open this year,” he said.

“The most recent research from ENBD REIT indicates that in Dubai, PBSA beds can accommodate only 6.5 per cent of students. Sharjah’s focus on education, culture and the arts makes it a huge draw from students around the world, and the University City is already well-known as a higher education hub.

When the Nest accommodation is complete, it will mean students living there need to take a 10-minute trek to reach American University, “the nearest part of University City to Aljada”.

“Our estimate is that there are around 26,000 students studying at University City, and UNESCO estimates that student enrollment across the UAE as a whole is growing at 7 per cent every year,” said Mathew.

“As of today, we have sold 96 per cent of units in the 11 buildings we have released so far – or 88 per cent of the entire complex. The cost of the cheapest one-bedroom unit was AED240,000, and we have not amended the prices since launch.

“Thus far, we have not considered further student housing projects but, given the success of Nest, should the right opportunity arise in the future, then we would certainly consider.”

More developers in the UAE are sharing that mindset these days. But market realities could intervene, and the biggest one would be the uncertainties set off by the coronavirus slowdown of the economy and, with it, the real estate sector.

Some developers believe that student housing can be the all-weather real estate category – that there will be a set number of students wanting to take up accommodation each academic year.

It’s on such hopes that developers are building their dreams on.

source:Gule


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