A 2015 survey conducted by The Times of nine South African universities found that for the 140 000 residence applications last year, there were only 68 419 available spaces.
This one bedroom, one bathroom apartment in Claremont has a secure entrance in a well-maintained complex and is on the market for R770 000 - click here to view.A survey by the Department of Education of the 50 public technical and vocational education and training colleges in the country, also conducted last year, revealed that for the 710 000 students in these institutions there were only 10 120 residence beds available, or only one bed per 70 students.
“When one considers these staggering numbers, together with the fact that there are over 1 million students registered at private and public universities in SA, the opportunities for property investors in this sector seem endless,” says Elmarie van Huyssteen, principal of Chas Everitt International in the university town.
“Indeed, in Stellenbosch, where annual capital growth is firmly around 10%, student housing is a vibrant and busy market.”
With investors accounting for 70% of all purchases, Van Huyssteen says parents are considerably outnumbered.
“Demand is greatest for sectional title units, but there is a big price discrepancy between those located on campus and those further away,” she says.
“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.”
This one bedroom, one bathroom apartment in Stellenbosch offers access to communal kitchen, laundry room and braai areas. It was recently on the market for R1.095 million.“Parents - especially those of female students - are also prepared to pay a premium for the 70sqm two bedroom apartments in Stellenbosch’s ‘Green Route’ area, which is a comfortable walking distance from the university and patrolled by security guards,” says Sonja Thielen, campus accommodation specialist at Chas Everitt International, who says prices for these properties range from R20 000 to R30 000 per square metre.
From an investment point of view, Van Huyssteen says it makes sense to buy off campus.
“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,” she says.
Lisa Rowell, sectional title specialist at Chas Everitt International in Claremont says in the suburbs surrounding the University of Cape Town, which is only able to accommodate 30% of its first-year students in residence, demand also significantly outstrips supply.
“Rondebosch and Rosebank, which are closest to campus, are obviously most popular, but, since the inception of the Jammie shuttle student transport service, the areas of choice have extended all the way through Mowbray, Newlands and Claremont,” says Rowell.
This one bedroom, one bathroom apartment in Stellenbosch offers access to a communal pool and outdoor braai facilities. It is on the market for R700 000 - click here to view.“That said, all of these suburbs are severely oversubscribed, and purchase prices have increased exponentially - units in new developments in Rondebosch, Newlands and Claremont are fetching up to R60 000 per square metre. Better value for money is to be found in next-tier suburbs such as Harfield Village and Kenilworth, where prices are still less than R20 000 per square metre.”
Charl Louw, co-principal of the Chas Everitt International franchise for the Northern Suburbs of Cape Town says while the province’s largest university, Cape Peninsula University of Technology (CPUT), has campuses spread over various locations, the Bellville campus, which is the university’s administration hub, draws many students to the Northern Suburbs.
“The same is true for Northlink College, which has campuses in Bellville and Parow, as well as the University of Stellenbosch’s Business School, also in Bellville, and its Medical School training facility at Tygerberg Hospital,” says Louw.
He says two bedroom apartments in Bellville, priced at around R550 000, and Parow at approximately R400 000, are very popular, and in Boston a small house can still be found for R1.2 million.
“Students are also attracted to anything for rent close to public transport on Voortrekker Road, where some developers have repurposed office buildings as student accommodation,” says Louw.
Increasingly, he says investors are also buying older homes in more affluent areas, such as Durbanville, and, after some restructuring, renting them out to students on a room-by-room basis.
“While they may pay regular market price for these properties, monthly rents of around R3 000 per room mean they are able to significantly enhance their yield in the long run,” says Louw.
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