_Student homes a bright spark for Dubai property market

While the general property market faces an oversupply, there were just 5,200 beds for students across 20 projects in Dubai at the end of 2019. The number of students pursuing higher education in Dubai alone during the 2018-19 academic year was 53,200.

Another factor weighing against the provision of dedicated student units has been a large amount of residential units on the market, with many students renting in residential communities.

Of the 5,200 beds currently classed as student accommodation, most are in Dubai International Academic City. About 40 per cent are on-campus units provided by the universities and 45 per cent are in off-campus, university-affiliated accommodation. The remaining 15 per cent are in purpose-built student accommodation (PBSA).

While PBSA is a nascent, but growing asset class in the UAE, it is a booming industry globally. In 2018 (the most recent year for which figures are available), the student housing segment attracted a record $16.3 billion (Dh60bn) of investment, according to Knight Frank. North America secured $6.3bn, followed by the UK at $4.8bn and EU countries with $2.3bn.

The first PBSA scheme to be built in the UAE was Uninest, a Dh110m, a 424-unit project completed in 2016 by Global Student Accommodation, a company founded by Nicholas Porter, who pioneered the PBSA model in the UK through Unite Group, an entity now listed on the London Stock Exchange.

Following on from this, KSK Homes opened the first phase of its student community last year, with 700 new rooms completed. Phase two containing a further 1,200 units is scheduled to complete this year.

The Myriad Dubai, a scheme being built by Strategic Housing Group and backed by DIFC-based FIM Partners, is also set to open a 1,711 room development (catering to 2,250 students) before the start of the next academic year in September.

The Myriad sits on one of the first plots specifically zoned for student housing. Myriad has worked with regulators such as the Roads and Transport Authority on appropriate traffic management standards.

Having these standards in place is vital to attracting investors, says Shehzad Jamal, a partner in Knight Frank’s healthcare and education practice in Dubai.

Having land that is specifically zoned for student accommodation, as opposed to mixed-use or residential, not only reduces risk, it allows for specific adjustments that can help with returns – for instance, they need fewer parking spaces, meaning basement or mezzanine can be used for other functions.

"There’s more confidence in what you’ve invested in”, he says.

PBSA not only offers culturally appropriate, secure properties, with separate blocks for male and female students, but there are also facilities such as coffee shops, group study areas, sports facilities, gyms and other areas where students can mingle.

That sense of belonging is important, Mr Jamal believes, particularly to soothe concerns of parents who worry about their children becoming isolated when living in a foreign city.

“It is what your parents are sending you for, really – so you grow up, grow out of your skin and you become an adult," he says.

"Being able to mix with different cultures and being able to see the world in a different perspective is why one goes abroad to study, mostly,” he says.

Of course, this comes at a price. A shared room at The Myriad costs about Dh2,700 per month, or Dh27,000 per year, as students typically pay for a 10-month period. A single room costs Dh4,000 per month or Dh40,000 per year.

This is more expensive than some surrounding residential units, but the PBSA units have much higher overheads as they provide more services – such as 24-hour security and technical support.

It also needs to generate a return for investors. Globally, in more mature markets like the UK, student properties have achieved yields of about 5-6 per cent, which is similar to multi-family residential developments.