The Next Surprising Fractional Ownership Trend: Student Housing

Once considered a niche asset class, student housing is quickly becoming a darling for commercial real estate investors. Even institutional players have been eyeing dollar signs in the last several months. Last August, Blackstone Properties bet big on student housing when it completed its acquisition of American Campus Communities Inc., the largest publicly traded owner and developer of student housing in the U.S. As an asset, student housing tends to do considerably well during depressed economic periods, and since there’s an overwhelming consensus from both policymakers and real estate executives that a recession is poised to jump out any minute now, the interest isn’t all that surprising. What is surprising, though, is how technology and regulatory frameworks have enabled new forms of student housing ownership, putting student housing on the forefront for fractional ownership.

Fractional ownership, where multiple investors collectively own a single property or a portfolio of properties, is not a new concept in real estate. The idea led to the creation of REITs in the 1960s. While REITs are fund based, a public market version of fractional ownership, a private version has emerged as well. Thanks to new regulations around investment offerings, a number of sites have sprung up giving access to individual investments in properties without having to deal with issuing stock to the public. These options have gained popularity in recent years as a means for non-accredited investors to gain exposure to the real estate market without having to fork over huge amounts of capital.

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