|M.Sc Student||Diamant Ella|
|Subject||Impact of Studentification on Profitability of Investment|
in the Housing Market
|Department||Department of Industrial Engineering and Management||Supervisor||Dr. Mira Baron|
|Full Thesis text - in Hebrew|
Studentifications are the changes caused by a large population of students moving into an area. Although it helps to create jobs and raises the education level of the neighborhood, some blame it for social evils, e.g., vandalism, anti social behavior, noise, litter, etc.
I examine the impact of studentification on the housing market.
The case study is a metropolitan area in the north of Israel, with two academic institutions with a student population of 30 thousand. While the students, as tenants of rented apartments, want to reside adjacent to campus to save commuting costs as well as time. The landlords, who let their apartments, have aversion to students. This asymmetry resembles the case discussed by Rose-Ackernan (1977), Anas (1987) and others dealing with Afro Americans and whites in the housing market. We expect students to be willing to pay higher rents if they reside adjacent to campus than residing far away from campus.
A few hypotheses were examined using the price of apartments sold in the city in the period 2005-11 and the price of rentals in the period 2011-12.
Empirical results indicate four main conclusions, while the rental prices are higher in "studentified" areas, the asset prices are lower, which means that the return on houses in areas requested by students is higher than alternative investments. The standard deviation is also higher which results in similar excess return per unit of standard deviation (Sharpe ratio) on "studentified" areas. Therefore, the results of the empirical research seem to show, in this case study, no preference for investment in “studentified” area.