How much money you make from renting out your property to students
With in excess of a million students registered at private and public universities in South Africa, there are numerous opportunities for people to invest in this profitable sector, according to Chas Everitt Property Group.
It pointed to a survey conducted last year by the Department of Education which showed that for 710,000 students in the 50 public technical and vocational education and training colleges in the country, there were only 10,120 residence beds available – or only one bed per 70 students.
Everitt highlighted Stellenbosch as a particularly strong growth area, where annual capital growth is firmly around 10%.
“With investors accounting for 70% of all purchases, parents are considerably outnumbered,” said Elmarie van Huyssteen, principal of Chas Everitt. “Demand is greatest for sectional-title units, but there is a big price discrepancy between those located on campus and those further away.”
For example, you’ll pay around R900,000 for a two-bedroom apartment within a 4km radius of campus, while the same property on campus will cost you around R2.8 million.”
Parents (especially those of female students) are also prepared to pay a premium for the 70 sqm two-bedroom apartments in Stellenbosch’s ‘Green Route’ area, which is a comfortable walking distance from the university and patrolled by security guards, said Sonja Thielen, campus accommodation specialiast at Chas Everitt International.
Prices for these properties range from R20,000 to R30,000 per square metre.
From an investment point of view, however, it makes sense to buy off campus, said Van Huyssteen.
“The monthly rental on a two-bedroom apartment on the outskirts of town is around R7,500 (with levies and taxes adding another R1,600), while, mid-campus, a similar unit will fetch between R8,000 and R12,000 – so not much difference in terms of percentage gross annual yield.”
Read: 6 things to think about before buying an investment property
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