Canada’s student-housing shortage is placing an undue burden on the country’s total residential supply, says the founder and CEO of Forum Asset Management.

Writing in the Globe and Mail, Richard Abboud contended that the lack of accommodation for university students is hurting the housing sector the most. Canada’s overall housing shortage is widely viewed as chronic, and the lack of sufficient rental supply is often described as a crisis.

“With more than two million post-secondary students in Canada, the shortage of student housing is a massive strain on Canada’s overburdened housing market,” wrote Abboud.

Forum provides purpose-built student housing across the country. Through one of its funds, the company is in the process of acquiring Alignvest Student Housing REIT’s entire portfolio for about $1.7 billion in cash and stock.

Student housing is an “emotionally significant” residential form, because a secure roof over one’s head smooths the transition to adulthood at a trying and vulnerable time for students, Abboud contended. But the implications of not addressing the problem are far more significant, he added.

If it is not fixed, Canada’s global competitiveness could lag further.

“This seems like an obvious market for real estate companies to cater to, yet the purpose-built student housing sector in Canada is massively underdeveloped,” wrote Abboud. “The data show that when we compare the total number of postsecondary students to the total purpose-built student housing supply, there is a significant shortage of beds.”

The Canadian number, also known as the provision rate, sits around 10%, while the U.S. and U.K. levels are closer to 30%, according to Abboud.

“Housing designed specifically for students’ needs is critical,” he wrote. “When it’s not available, it pushes students away from university campuses and into surrounding communities, forcing them to compete with, and potentially displace, families and individuals looking for a reasonably priced place to live.”

He noted that, according to Canada Mortgage and Housing, the country’s overall housing market will need 3.5 million more units by 2030 to meet.

Students across Canada are deferring their studies because they can’t secure housing. But international students are not to blame, he argued.

“In fact, we need those students,” he wrote. “We don’t need fewer skilled workers, we need more.

“Rather, the problem is that we haven’t built out our housing capacity to accommodate this critically important part of our country’s emerging workforce. For decades, most investors have sat back and hoped universities and colleges would sort out housing needs for students. Our performance as a country has fallen short.

But it’s not too late to fix the “mess.” He noted that purpose-built student housing is cheaper to construct than regular housing because of the need for fewer kitchens and bathrooms, “and rents remain reasonable.”

“Costs can be further reduced when the business model is scaled up for efficiency, and there are savings to be realized if local governments make getting approvals in place faster and expediting construction a priority,” wrote Abboud.

He called on the private sector to produce more student housing, be it in large cities or university towns.

“As organized pools of capital grow, so too will the housing stock for students and other Canadians,” wrote Abboutd.

Rendering: Courtesy of Forum Asset Management