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My friend at another college brags about her off-campus housing complete with a tanning bed and swimming pool. Why doesn’t our school offer that?

With more students learning of the growing trend referred to as privately owned, purpose-built student housing (POSH), we are seeing this question asked more often. These POSH properties are becoming a dominant living choice for college students, boasting gyms, modern furniture, retail stores, tanning salons, and more. Not every college is destined to have these luxury properties, which is explained here.

Not too long ago, student housing was limited to a dingy dorm room on campus or renting an apartment outside. Both options were likely to involve poorly maintained buildings and shared facilities. Student attitudes to housing were indifferent, since they did not really care where they lived or what condition it was in, it was just temporary anyway.

Things have changed in the student housing world and it has gone all upmarket. On- and off-campus housing projects today can be lavish affairs with ultra-modern facilities such as hardwood floors, large flat screens, high-speed internet, fully fitted kitchens, high-tech fitness suites, and heated swimming pools.

Demand for this level of accommodation is on the up, spurred on by an influx of affluent international students and parents that are willing to pay a premium for their kid’s college experience. This has resulted in a surge in investment from real estate developers looking to tap into the booming student-housing market.

Luxury student accommodation is rapidly becoming the standard at large public universities and residential developers are pouring money into the sector. Industry research firms estimated that over 47,000 new beds entered the privately owned, student-housing property market during the fall semester of 2016. Privately owned student housing is now an integral part of the national real estate sector. This will only send rental prices one way.

Student housing generally offers a comparable rent to conventional housing. Several friends can share one multi-bedroomed unit to further lower the costs. Utility bills are often included in the rental rates, making student housing a better option than a standard apartment.

Demand is high for rooms near campus and they are often running and full capacity during term time. Investors are aware that proximity is key factor for resilience during market adjustments.

Financiers are finding returns and occupancy rates for student housing attractive incentives when compared to conventional apartment units. Luxury student housing is still in its infancy and real estate developers and analysts forecast steady growth ahead in the sector. Campus capacity and enrollment numbers can shift from year-to-year which will have an effect on occupancy rates for nearby student apartment projects.

As demand rises the level of luxury will follow in efforts to stay ahead of the competition. Luxurious lobbies with oil painting reproductions, infinity pool or video game rooms may not be enough for some if there is more in the apartments on the next block.

More parents are willing to pay for private apartments with all of the modern conveniences close to campus. Students today have grown accustomed to a certain level of lifestyle at home and many parents want to see that continued when their children leave for college. Now students are able to maintain the same comforts of home even while away at school, whether they are hard at work on school projects or browsing the web searching for tickets to live events nearby. If the options are there, the lucky ones can have them.

My roommate got a pet elephant. Then it got lost. It’s in the apartment somewhere… Steven Wright.

Written by John Regan, former Director of Sales, for equity research.