Student digs: demand increases
Savvy developers are incorporating attractive lifestyle amenities in student accommodation offerings, presenting learners and investors with opportunities that stretch far beyond terms of study
What do teenagers need? Education,” writes Savvas Savouri, Toscafund chief economist in the 2019 Knight Frank Wealth Report, which looks at how private wealth is shaping property markets globally. “It’s almost as if they can’t build the student accommodation quickly enough in the UK.”
The report states that “property investors will become increasingly focused on income, asset management and development opportunities”, increasing their exposure to education facilities and student housing.
“While the South
African market lags about three to five years behind global trends in student accommodation, there are opportunities for investors, developers and property managers,” says Johan
Janse van Vuuren, property development manager at Eris Property Group.
Based on the Department of Higher Education and Training’s shortfall estimate of about 250,000 beds, Eris highlights that student accommodation will need to scale rapidly to meet government’s intended increase of tertiary enrolments to 1.5-million students by 2030.
INCREASED DEMAND
Emily Craig, owner and
CEO of Cape Town-based Student at Home, which has 326 units, believes student accommodation will always be in short supply. She attributes her success to creating the right environment.
“It’s one thing giving students the necessary facilities, but it’s another to manage them,” says Craig.
Student at Home clients risk losing their deposit if they don’t stick to certain rules. “As much as kids want freedom, parents are happy to know there is a certain amount of structure they have to abide by,” she adds.
Swish Property Group has rental capacity for more than 700 beds in Wynberg and Observatory, Cape Town. Housed under the banner My Domain Student Living, students have everything they need on their doorstep. “We build and rent studentcentred residences that are focused on their wellbeing, offering parents peace of mind and creating the best environment to facilitate success,” says Craig Getz, director of marketing and residential sales.
My Domain is a safe, secure turnkey product with biometric access control. Residents get the benefit of Wi-Fi, a shuttle service, a gym and student liaison representatives on site. “Yield fluctuates based on the market. It’s not as straightforward as a block of flats where you’re getting a specific yield,” Getz says.
BUY OR RENT?
Parents who believe it is better to buy than to rent invest on behalf of their children at tertiary education level, because student residences are often full and renting can amount to the same as a bond repayment.
Rob Stefanutto, Dogon Group Properties head of developments, says in Cape Town about R4,500 a month would get you a small shared student room with a communal bathroom and kitchen; and a small student/bachelor pad with a kitchenette goes for R7,500.
“Some of the more upmarket private residences in safe locations ask more than R7,500 for a shared room, going up to R10,750 for a private room. If a child enrols for a three-year degree, parents would be in the hole for R387,000 in accommodation without the possibility of return,” he says. “Now consider the cost of buying an apartment. Entrylevel 21m2 studios are selling for R985,200, including VAT and transfer, at 1 Albert Road in Woodstock. That would equate to a bond instalment of about R8,556 a month if
“Adequate student housing is about more than providing a place to sleep. It’s about creating communities and a listening, learning and living environment” John Schooling, founder, STAG African
you were to put down a 10% deposit.”
WESTERN CAPE
Accommodation close to higher-learning institutions can attract more income per square metre and guarantees year-on-year tenants. Balwin’s The Huntsman in Somerset West ticks those boxes for students enrolled at Stellenbosch University, for example. Besides quality apartments with ecofriendly appliances, Wi-Fi and cutting-edge security, The Huntsman has the added advantage of being close to shopping centres and beach watersports. Unit prices start from R849,900.
“There’s a boom in Stellenbosch developments offering accommodation ideally suited to students,” says Louise Varga, Pam Golding Properties area manager for Stellenbosch, Somerset West and Gordon’s Bay. “Common features include excellent location, security, off-street parking and luxury or contemporary finishes in the apartments.”
The Niche is a 51-unit development with bachelor units starting at R1.5m. “Given the demand for rental accommodation, this offers excellent return on investment,” Varga says.
At Bosmans Club in Bosman’s Crossing apartments start from
R1.4m and are ideal for older students who don’t need to be in the town centre.
The Den, on the other hand, comprises 60 studios minutes from campus.
Only four units are left. The developers’ meticulous attention to detail contributes to a conservative estimate of 25% capital growth already, and a high rental occupancy rate. Plans for Phase 2 are under way.
STAG African has funded and developed four residences at Stellenbosch University with 600 beds on a 20-year lease. The returns are relatively modest at about 7% (after interest charged), but the investment is supported by a strong balance sheet on the part of the university.
“Adequate student housing is about more than providing a place to sleep. It’s about creating communities and a listening, learning and living environment,” says STAG founder John Schooling.
EASTERN CAPE
At Fort Hare University in Alice in the Eastern Cape, STAG African will hand over 2,047 beds in two phases as part of a R540m development funded by the Department of Higher Education and Training (DHET), the Development Bank of Southern Africa and the European Union.
With the first 737 beds already occupied, the project is set to complete in October 2020. “This is the single largest student housing development ever undertaken by any of the 26 public universities in SA,” says DHET director-general Gwebs Qonde.
GAUTENG
Students looking for affordable accommodation will love the location of iQ Brooklyn, just 800m from the main campus of the University of Pretoria (Tuks). Priced from R995,000 for a studio, including transfer costs, iQ Brooklyn provides meeting rooms, a cafeteria offering home-cooked meals, excellent security, fast internet, a pool with a sun deck, and laundry and cleaning services. It consists of five blocks of studio, onebedroom and two-bedroom units, each with secure undercover parking.
“An added advantage is that investors buying into this development can diversify and target the diplomatic contingencies in the nearby areas by offering short-term accommodation for foreign-office visitors,” says Ilma Brink, regional development sales and commercial property manager for Pam Golding Properties Pretoria. “Because short-term rentals are allowed, the yields can be as high as 15%. In the long term, we have determined affordable levies, rates and taxes, as well as a net return on investment from a disposable income perspective of 7.5%.”
Those who get it right will have an above-average offering that goes beyond facilities. With campuses in Bloemfontein, Port Elizabeth, Cape Town, Stellenbosch, Potchefstroom and Tshwane, CampusKey Student Living is one of them.
“CampusKey is an inspiring place that motivates students to connect, make friends, study hard and become the best version of themselves,” says MD Leon Howell. “We believe that great design, together with our all-inclusive offering and student community, does indeed encourage a more successful future.”