SHURE GTA panel: Significant changes are underway in the evolution of unit type preferences and cost tolerances  

While enrollments in Canada have surged in recent years, the locations from which students are attending have evolved. Canada's domestic enrollment is forecast to increase next year and continue rising after 15 years of stagnation. Meanwhile, Canada's international enrollment grew from 200,000 to approximately 900,000 in the last 20 years. Higher education has seen a shift in country of origin, with students from India now being the most significant international population. In contrast, the number of students from China has decreased in Canada and most other Western countries. Students from Nigeria, the Philippines, Mexico, and Brazil also rose noticeably. This trend in Canada is similar to most G7 countries and the European Union.

"We are seeing increasing numbers of domestic students and Indian students, and that number of Indian students is pretty dramatic in terms of where they're up - they're now pretty much level at around about with, China," according to Dan Smith, Managing Director of Student Housing Consultancy, who discussed trends in the U.K. market at the SHURE GTA event on November 15. 

However, the panelists agree that students from India have different wallet sizes, typically spending less than Chinese students. In addition, they require significantly smaller units and are more comfortable sharing a larger apartment with multiple students.

"The impact on housing, separate from shortages, is that Chinese students generally have 5-10X the available funds compared to students from these other countries," said Dr. Mike Porritt, Vice President – International at Scion Advisory Services.

In a remarkable shift in the U.K. market, Smith noted that students from India will soon take the top spot as the prominent international population. This shift from Chinese to Indian students as the dominant global student base occurred more rapidly than most industry observers had expected. With these demographic shifts in international students, Dan Smith suggested that the industry needs to build a housing product more reflective of the market.

 "What we need to be doing is have a real look at what we can build for the Indian and domestic markets, too," said Smith.  

Price sensitivities are also changing, according to the SHURE panel. Students at U15 institutions in Canada have a minor sensitivity. U15 is a term used for premier, highly sought-after academic institutions. At the same time, students at non-U15 institutions and colleges have more sensitivities.  

"These price sensitivities are impacting what kind of housing can work," according to Dr. Porritt.

Rental rates in the Ontario college market are in the $300-$350 per month range, creating challenges for the profitability of new housing that a developer can bring to the market. "This is what you're competing with," said Porritt.

The panel noted that the unique combination of factors, ensuring international and domestic enrollments in the Western world, and high inflation create overcrowding and often unsafe student environments. 

"Basements are overloaded, houses are overcrowded, and London (Ontario) almost had a fire that could have killed two to three students if not for a student who happened to be walking by and saw the smoke coming out from the basement," according to Porritt.

Students are more likely and willing to share bedrooms and accommodations depending on the market, especially on the college side. Some university apartment markets in the GTA may have as many as six students living in a two-bedroom apartment.

Viler Lika, Founder and CEO of property technology firm SingleKey, said his firm observed a significant challenge in affordability emerge in late 2022 following the resumption of activities post-pandemic. Students were returning to campus for the first time post-pandemic, creating a surge in housing demand. Because higher education was primarily remote for two years, the general population absorbed a significant amount of dedicated housing for students, leaving less supply. Finally, Canada eased restrictions on immigration during the pandemic. "So all of those factors came together to really kind of put a lot of pressure on the demand side on the housing market and make affordability a challenge," according to Lika.

According to Lika, the GTA market is now seeing less turnover. "Coming into 2023 and 2024 now, what we're seeing is, because rents have gone up on average $500 to $600 a week, for a full unit, we're seeing now an impact on turnover because people don't want to leave their existing leases."

David J. Roberts, Director of the Urban Studies Program; Associate Professor, Teaching Stream; Academic Director of Multidisciplinary Urban Capstone Project; Faculty Advisor, Access & Inclusion Peer Programs, University of Toronto, said that everyone in the room could reasonably agree that the GTA post-secondary arena is facing an affordability crisis. However, Roberts noted that typical wraparound services in an on-campus dorm setting may not be available in private off-campus housing. These wraparound services, such as mental health counseling, are especially needed in the wake of the pandemic. According to Roberts, international students also risk exploitation by the private student housing sector.

"We need to make sure they [the students] are not falling through the cracks, not having a crisis alone in a private rooming house," said Roberts.

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