Sunday Tribune

Students desperately need homes

BONNY FOURIE bronwyn.fourie@inl.co.za

THE demand for student accommodation has never been so high and now that life is returning to some kind of normality, and students are back in lecture halls, the spotlight is on this property sector.

Real estate auctioneer Joff van Reenen, a property industry veteran and founding partner of High Street Auctions, says he has “never before” seen the need for student housing as high as it is now, nor the timing so favourable for capitalising on this demand.

“When the World Bank Group’s International Finance Corporation was researching the feasibility of investing R150 million in a local property company’s plan to develop accommodation hubs for an additional 16000 student beds, it drew attention to the fact that South Africa’s student housing supply-demand gap had already exceeded 500 000.

“The IFC’S report also forecast that, by 2025, the student accommodation shortage would rise to more than 780 000 beds, no doubt at least partially prompting its decision a year ago to proceed with the investment.”

Furthermore, he says, in December, Growthpoint Properties launched an unlisted student accommodation REIT with a R2 billion seed portfolio and approval from the National Student Financial Aid Scheme (NSFAS).

“There’s no question that student accommodation is emerging as one of the most exciting real estate investment trends in South Africa and the availability of opportunities in this sector is increasing.”

How big is the supply-demand gap?

Historically, there has been a “massive gap” in student accommodation requirements, agrees Grant Smee, managing director of Only Realty Group.

He too believes there has been an uptick in developers focusing on the student accommodation space, particularly in areas like Durbanville, Stellenbosch and coastal areas like Gqeberha.

“The areas most in need of more student housing are linked to the coastal universities – Stellenbosch, Makhanda and Cape Town. The latter is a big city where all demographics are facing a housing shortage but Stellenbosch and Makhanda are small towns battling to meet the demand.”

Alexandria Procter, chief executive of Digsconnect, an online marketplace that connects landlords with students looking for accommodation, also notes, “Stellenbosch has a chronic under-supply of student housing and needs more developments urgently.”

Other “good spots” for student developments include Durban and the northern suburbs of Cape Town. The biggest stakeholder in the student accommodation space, she says, is NSFAS, which currently funds 800000 students.

“Digsconnect is the largest repository of Nsfas-accredited properties but NSFAS needs to urgently update their norms and standards document to reflect modern living requirements so that more suitable properties can be made available to students.”

Van Reenen says the “student accommodation crisis” at the Cape Peninsula University of Technology (CPUT), is “arguably even worse than that of University of Johannesburg”.

“Cape Town’s real estate market is extremely competitive in general, but prices rise exponentially the closer one ventures to the City Bowl and Atlantic Seaboard. CPUT’S District Six campus is immediately adjacent to the CBD – a prime location that, for students, is a double-edged sword accommodation-wise.”

He says: “This year CPUT as a whole enrolled 33000-plus students, more than half of who are studying at the city campus which offers fewer than 3000 beds in its residences.”

To eliminate the gap in available student accommodation, Smee believes there needs to be a collaboration between the private sector, the government and the universities to build more.

“The second big issue is that of affordability. Will students be able to afford to live in these in-demand areas? This is where government and university subsidies must step in as it’s difficult for developers to justify projects that will not be profitable.

A balance must be struck.”

Procter says landlords are investing in rental properties “all the time” but the “trick” is where to find them.

“South Africa is a very economically diverse market, so it’s important to have a match between the price of properties and the students that you’re targeting.”

She adds: “Demand way outstripped supply on Digsconnect this year. Many of our landlords told us if they had second buildings, they would have filled them up on Digsconnect as well! It’s an exciting time to buy student properties...” Where must these homes be? Procter says student accommodation needs to be as close to the campus as possible, not only for access to classes and facilities, but also because the campus is the hub of students’ cultural life.

“Another option is to be on the university transport links, so that it’s easy for students to get around.”

Smee echoes this, saying accommodation must be within walking distance of places of study, or close to affordable public transport, as the majority of students do not have their own cars.

“Proximity to shops, health-care centres and other day-to-day necessities is also beneficial to students who do not have the means to travel far.”

What should they offer?

Smee says students need places to study – either in their rooms or in dedicated quiet common areas; places to socialise; amenities such as laundry rooms and good security within the building.

“High-speed internet is now a non-negotiable with the rise of remote learning and hybrid learning. With the prevalence of load shedding, I would also urge developers to consider generators, UPSS, or inverters.”

In addition to uncapped, super-fast wi-fi and “great security and safety features”, Procter says furnished properties get filled faster than unfurnished ones.

What can students afford to pay?

While rents depend greatly on the market, university and city one is targeting, she feels “anything in the R4500 per student per month range sells fast”.

Smee says the accommodation should be “as cheap as possible” to ensure accessibility to students from disadvantaged backgrounds.

“If I had to put a number to it I would say R3 000 to R5 000 a month for individual students sharing a room and R4000 to R6000 a month for students getting their own space” he says.

“It’s important to remember that the students themselves generally aren’t the ones paying for their accommodation. They are either funded through grants or bursaries or by their parents.”

The goal, therefore, he says, is to “minimise the financial stress on the guarantors” and de-risk investors by offering reasonably priced accommodation.

SPORT

en-za

2022-05-22T07:00:00.0000000Z

2022-05-22T07:00:00.0000000Z

https://sundaytribune.pressreader.com/article/281831467346050

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