The pros and cons of investing in student accommodation in South Africa
The recent protests at universities and colleges across SA have caused many to question the wisdom of investing in student accommodation – but it still remains a highly attractive option provided you buy the right kind of property in the right location, according to Bill Rawson, chairman of the Rawson Property Group.
“The disruption of studies and exams is obviously a worry for investors as well as students and parents, in recent times some students prefer staying at home and studying online or by correspondence, and some – those who can afford it – opt to attend private institutions here or overseas where they will be unaffected by protect actions,” said Rawson.
“The fact remains, however, that the vast majority of SA students attend our public universities and colleges – and these institutions are trying their best to close the huge gap between the demand for accommodation on their campuses and the available spaces in the official residences.”
This in part because current accommodation arrangements can accommodate fewer than one in five students who apply for a residency, and student numbers are growing annually as increasing numbers of young people complete their secondary schooling.
“SA is attracting higher numbers of foreign students and from other countries in sub-Saharan Africa, where the latest research by Jones Lang LaSalle (JLL) has found that the number of young adults aged 18-25 will increase to almost 100m by 2020, and that the demand for new, purpose-built student accommodation is set to top 500 000 beds in the next five years.”
The JLL report Rawson mentions also notes that due to continuing public sector budget constraints (and not only in SA), private investors will not only have a vital role to play in meeting this demand.
“So now the question becomes not whether to invest but how quickly one can identify and acquire suitable properties, and this is becoming increasingly obvious in the major student accommodation markets like Stellenbosch, Pretoria, the Southern Suburbs of Cape Town and the parts of Johannesburg surrounding Wits and the main UJ campus,” said Rawson.
“In these areas, the student accommodation market is no longer seasonal, with the bulk of sales taking place from August to December. Now there is demand all year round, and parents make up the increased percentage of buyers.”
However, accordingt o Rawson, in order to ensure the best returns, it is essential to take heed of what students – or their parents – are most likely to rent.
“This can generally be summed up as clean, safe accommodation within easy reach of campus at an affordable price, and in our experience, the most consistent demand is for newly-built and pre-owned one and two-bedroom sectional title apartments with high tech security, parking and good access to shops and other amenities as well as campus.”
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