The South African student accommodation property market is said to be buoyant and attracts investors, developers and private property buyers.
According to a research report by Auction Alliance, South Africa’s leading property auctioneers, the student accommodation market is one of the few property sectors that have successfully bucked the economic downturn.
“In the recent years, the student accommodation market has emerged as a key asset class, attracting a growing interest from investors, developers and private operators on auction floors countrywide”, says Auction Alliance chief executive officer, Rael Levitt.
Levitt explains that the swift development of South Africa’s middle class, rapid urbanisation and the influx of approximately 72 000 foreign students, mainly from Africa, has resulted in a growing inability of tertiary institutions to house students.
Data from the Department of Education show that the current provision of student housing in residences is approximately 100 000 for a student population of 530 000.
Student accommodation provider, South Point Properties bought the New Market Junction property in Woodstock for R49 million at an auction.
On average, just under 20 percent of students nationally, will be able to find accommodation on campus, he says.
While student numbers increased significantly of late, the lack of funding of tertiary institutions has created lucrative opportunities for a small number of niche developers and private property companies.
Levitt says investors who buy these properties can seize the opportunity of the high demand and low supply of student accommodation currently being experienced in the market.
“The student accommodation market sector has experienced rental growth and attracted a healthy amount of investment.”
With the living conditions of students playing a significant role in their overall performance, a higher end product has entered the market.
These properties offer low cost student housing options such as dormitory style shared accommodation rooms or flats within renovated purpose built blocks that offer modern amenities.
Companies such as South Point Properties bought partially let office properties that were considered undesirable to mainstream investors.
Investors stayed away from these properties because they had insufficient parking. Those who bought them at good prices turned them into clean and secure student environments.
Levitt maintains that this trend has had a positive impact on areas such as Braamfontein in the Johannesburg CBD due to the high concentration of tertiary facilities in the area.
South Point Properties and Aengus Property Holdings are leading student accommodation providers in Braamfontein.
In spite of the instability of the property market, the lack of student accommodation facilities within close proximity to South African universities, are proving to be significant commercial drivers for investors and developers.
“The sector is anticipated to continue offering investment potential in both the purpose built and buy-to-let sectors, specifically in the current low interest rate environment”.
Auction Alliance have sold a number of properties to South Point Properties, including New Market Junction in Woodstock for R49 million, 10 & 12 Plein Street in the Cape Town CBD for R30 million, President House in Barrack Street for R12.6 million and Stanhope Building in Claremont for R24.5 million
It has also sold a student college in Braamfontein for R5.8 million, 46 Biccard Street in the Johannesburg CBD for R15 million and 249 Smit Street Braamfontein for R6 million. – Denise Mhlanga
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