Purpose-built student accommodation (PBSA) has witnessed growing investor interest across major English-speaking nations in recent years. Institutional investors are increasingly engaged in major transactions in mature PBSA markets such as the UK and USA, while Canada remains ripe for investment as the student accommodation sector grows from its infancy. Frequent mark-to-market of rents due to naturally high turnover provides a favourable environment for the purpose-built student accommodation asset type.
Canada’s global position in the PBSA space is growing and highly opportunistic. Maintaining its position as one of the top destinations for international students, Canadian PBSA stands to benefit greatly from favourable government policy that encourages international study in Canada.
International student enrollment continues to significantly outpace PBSA supply, while the United States has seen a decline in international student enrollment due to a combination of high education costs and unfavourable government policy that discourages international study.
Capitalization rates of PBSA assets continue to compress globally even as interest rates rise. This is due to growing pools of capital chasing few assets, as well as the high turnover of beds leading to frequent adjustment of rents to market. An opportunity exists in Canada where the yield spread between traditional multifamily assets and PBSA remains wider than that of the USA and the UK. These mature PBSA markets have seen this yield spread significantly compress in recent years.
Canadian PBSA is supported by strong fundamentals of increasing demand and sluggish supply, favourable government policy, and an opportunistic investment environment which should correlate with strong returns for those involved in the PBSA space over the coming years.
Forum is well situated to capitalized on the PBSA market given our deep sector experience in development & asset management. Forum has a total of 3,800 PBSA beds currently owned and in its development pipeline.
“Forum recognizes that the demand for student housing in Canada far exceeds availability” says Aly Damji, Managing Partner, Real Estate at Forum, “Students are becoming more discerning in their tastes – not only do they want convenience and security in their housing – but also high amenitization, a strong sense of community, health, wellbeing, and sustainability”.
Forum recently developed a new student housing brand called ALMA, in collaboration with the award-winning design firm DesignAgency.
“ALMA has been curated for the students of today. Fully furnished accommodations, high-end design and amenities in an environment designed for our residents’ best life. From work lounges and focus rooms to social spaces and fitness studios, we have created everything one needs to craft how they want to live”, says Damji.
“Our first ALMA project in Guelph delivers on all of these core principals – we adaptively re-used an obsolete hotel thereby saving thousands of tones in carbon emissions instead of building new. We also created an expansive number of amenities that have been thoughtfully designed – even our laundry room has an area for students to congregate. The sense of community is further bolstered by our curated local art and programming. We are excited about our first ALMA project and have more planned across the country”.
Aly Damji is Managing Partner – Real Estate at Forum Asset Management.
Aly Damji
Aly Damji is Managing Partner – Real Estate at Forum Asset Management.
