Student buys are also good for parents

CAPE Town students have traditionally lived in various forms of shared housing, from official university residences to private, rented digs. Recent trends, however, indicate this kind of community living is on the decline. Instead, students are opting for their own, private spaces, despite the higher cost this type of accommodation usually demands.

“Students these days are definitely more likely to rent a studio or one-bedroomed apartment than they are to rent a multiple-bedroomed property,” says John Birkett, co-franchisee at the Rawson Property Group’s Claremont franchise and Cape Metro Classic Rentals.

“There is probably an element of parental influence in this – parents feel more in control of their child’s lifestyle in a one-person flat – but the students themselves are also less inclined to share their space than ever before.”

For investors, this trend offers a wealth of opportunity, with demand for student-appropriate rentals consistently higher than supply. Yields vary depending on the age and con- dition of the property, but Birkett estimates a typical return of around 6%, gross.

“Because of student preferences, investment studio and one- bedroomed apartments from Woodstock all the way through to Kenilworth and even Pinelands are sought-after and difficult to find,” he says. “Prices vary depending on the area, but you can expect to pay around R1.2 million and R1.8m for a studio and one-bedroom in a new development, respectively.”

Older apartments are more affordable and can offer higher yields, but come with their own set of complications.

“One of the main problems with older apartment blocks used to be the lack of off-street parking,” says Birkett, “but with services like Uber on the rise, this is no longer such an issue.

“These days it is more a matter of high expectations – students aren’t satisfied with second-rate finishes and furnishings. Poorly maintained apartments or furnished rentals with shabby decor can be difficult to tenant.”

Other essential amenities for students include a good internet connection, which can replace subscriptions like DSTV thanks to the popularity of streaming entertainment providers like Netflix. Security is also important and 24/7 access control is a big plus.

For students, high expectations come with high rentals, however, and the average apartment in a popular student area will command around R10 000 per month.

“Apartment rentals start at about R6 500,” says Birkett “and go all the way up to R25 000 in the best developments. Finding tenants willing to pay more than R12 500 can be challenging, however.”

Buying a student-friendly apartment as a parent could be an economical way to get a foot in the Cape Town property market.

“By combining the expense of accommodation for your child with the expense of an investment purchase, you subsidise the one with the other,” says Birkett. “It’s an excellent way to start a rental portfolio in one of the most profitable property markets.”