With top universities like University of Toronto, real estate investment in student housing near campuses in Toronto has become extremely attractive. However, as the number of domestic and international students continues rising, demand for off-campus student housing has vastly outstripped supply. For example, Toronto currently faces a shortage of over 32,000 student housing units. Therefore, real estate investors need to leverage this opportunity by developing purpose-built rentals near universities, and catering to unique preferences of Millennial and Gen Z students. When investing in student housing, proximity to campuses is key – average rents rise 1% for every 1 km closer to a university. Ideal locations are within a 5-minute walk or 30-minute commute. Beyond basic amenities, student preferences are now geared towards resort-style lounges and high-end finishes. By targeting university hot zones in Toronto, real estate investors can strengthen their portfolios and capitalize on this underserved massive demand.
National student population and international enrolment surging
Canada hosts over 1.5 million students in higher education, and enrolment rates continue rising steeply thanks to a growing international student population. From 2010 to 2017, the number of international students in Canada shot up 119% to 435,000 in 2018. Domestic enrolment is also at an all-time high as more Canadians pursue higher education. However, purpose-built off-campus student housing supply lags far behind student growth. Canada trails the US and UK by 10-15 years in developing dedicated student rentals outside campuses. Currently only 3% of Canadian students live in purpose-built off-campus housing, versus 10-12% in the US and UK.
Massive unmet demand concentrated around universities
With enrolment far outpacing supply, there is enormous unmet demand for 416,000 more student beds nationwide and 32,000 beds in the Toronto area alone. Ideal locations for investment are within 1 km of campuses, where rents rise 1% for every 1 km closer. Student preferences skew towards rentals within a 5-minute walk or 30-minute transit commute. Given high costs and unstable co-living arrangements, student demand for quality purpose-built rentals near campuses will remain strong.
Catering to Millennial and Gen Z preferences crucial
Millennials and Gen Z form the majority of students, so catering to their unique preferences is key to maximizing returns. Beyond just basic amenities, students now expect upscale lounges, granite counters, hardwood floors, stainless appliances, ensuite bathrooms, rooftop BBQ decks, and outdoor pools. Landlords and developers must provide suitable housing aligned with student expectations. Those who fail to do so risk high vacancy rates and rapid turnover from unsatisfied student tenants.
Target Toronto’s university hot zones
Top university hot zones in Toronto presenting major opportunities include the University of Toronto (UofT), York University, Ryerson University, Ontario College of Art and Design (OCAD), George Brown College, and Seneca College. With UofT downtown, investors should target nearby areas like Harbourfront, Annex, Cabbagetown, Christie Pits, Koreatown, Little Italy, Little Portugal, Yorkville, and more. Areas around suburban campuses like York University are also prime targets. Checking tools like REIN’s University Hot Zone and Goldmine Scorecard allows assessing the maturity of student housing investment potential.
In conclusion, Toronto’s student housing presents a huge untapped opportunity for real estate investors due to massive underbuilt demand. By developing purpose-built rentals near top campuses and catering to unique student preferences, investors can maximize returns and hedge against risk and vacancies.