Charting the Way FORWARD
Thus, GST would not be applicable on annual subscription/fees charged as lodging/boarding charges by educational institutions from students for hostels. Confusion, though, still exists when it comes to private student housing providers especially if the billing entity to students is not the educational institution. Even if the educational institution is the billing entity for housing, there is no clarity on ancillary services/amenities which are sometimes separately charged like food, laundry, recreational facilities etc. “Tax incentives should be given to make this segment attractive to the operators and standardization of amenities and services should be laid down by the government, opined, Goyal. Student housing as a product is severely undersupplied in the major markets, and has the potential of high and sustained occupancy rates. While, investors f are already looking at capitalizing on this opportunity for stronger returns, the developers too are foraying in this sector “The potential for success in the student housing real estate market in India could be similar or even more than that in UK. Some of our cities such as Pune, Bengaluru and Chennai, see high annual student enrolments. A broad estimate indicates that currently cities like Pune and Bengaluru only accommodate about 18 to 20% of the inward migrating students,.” stated Jalan. Moreover, student housing has been attracting a significant share of real estate investment since mid-2017. Studies of foreign markets suggest that student housing real estate investment trusts (REIT) have been outperforming all other REIT indices by a considerable margin. The rental yield, i.e. the rental income as a percentage of the property’s value, is five times that of a three-bedroom flat in a premium locality in the metros. With Indian cities gaining momentum as world class educational and research hubs, Student Housing as an asset class will slowly pick up in India over a decade. However, the developers, investors and government should make collaborative efforts to make it a successful organized business across the cities.