October 31 2023
For Broll Auctions
South Africa’s dire shortage of student accommodation continues to be an opportunity for real estate investors.
“The problem of shortage of affordable student accommodation which is well-located near tertiary institutions has moved past being a mere trend and become the status quo, after more than a decade,” said Norman Raad, CEO of Broll Auctions and Sales.
The 2021 International Finance Corporation Report stated that South Africa’s student housing sector had a shortfall of as many as half a million beds, which resulted in property companies such as Growthpoint reaching into their pockets to counter downturns in other areas of the property market. Earlier this year, Higher Education Minister Blade Nzimade put this figure at 400 000.
“Investors with a vision can currently snap up under-utilised buildings such as office blocks at excellent prices, and convert these into cost-effective student housing offering stable returns,” Raad said.
Shared spaces to reduce costs
Shared housing options maximise space efficiency, accommodating more students in a smaller footprint and bringing down costs for all. “Students either have their own or a shared bedroom, and shared communal spaces such as living room, kitchen and bathrooms,” Raad said. Broll is selling one such seven-bedroom property just 500m from the University of Johannesburg, which can accommodate 14 students, with another in an adjoining cottage. “With such a property, owners need to get their paperwork in order, such as permission to operate a commune – which this particular property has.” A commune also offers a more social environment for students.
Mixed use spaces
With a desire to have the world at their fingertips, students of today want to be in the middle of the action. “This can be seen in the trend to have student accommodation located in mixed-use developments, with some retail or entertainment aspects.” A fully-let mixed-use student property in Cape Town’s Rosebank – walking distance to The University of Cape Town, is on auction, offering two houses with eight en-suite rooms, seven two-bedroom apartments and a retail store. “This type of prime student accommodation aligns this asset to the high levels of demand for student accommodation within the area.”
Apartment blocks
Pretoria has student accommodation nodes centralised around the University of Pretoria and UNISA, such as Brooklyn and Sunnyside. A rarely-seen investment opportunity is the Berg en Dal seven-storey block of 63 flats in Rissik Street, which goes under the hammer by Broll on October 26. “This building has the potential to be transformed into one of the ‘new-age’ student accommodations which have become popular, offering facilities such as Wifi, gym, swimming pool and shared relaxation areas and braai spaces,” Raad said.
“For property investors who are seeking to build resilient portfolios which can weather possible downturns, student accommodation offers a lower-risk, lower-reward type of investment. It remains a resilient asset class.
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