Over the recent years South Africa’s education system has attracted a growing number of foreign students from other countries in sub-Saharan Africa. This new wave of young adults aged 18-25, which is expected to increase to almost 100 million by 2020, is a huge opportunity for private buyers who are looking to invest in the housing market. With purpose-built student accommodation set to top 500,000 beds in the next five years and universities and colleges failing to cover the gap between the demand and the available space in their official residences, private investors can expect their investments in this sector to go far.
In areas such as Stellenbosch, Pretoria, the Southern Suburbs of Cape Town, the parts of Johannesburg surrounding Wits and the main UJ campus, student housing is in fact no longer seasonal, with parents making up for the increased percentage of all year round buyers.
Students and their families are looking for clean, safe and affordable accommodation, better if newly built, pre-owned one and two bedroom apartments, within easy reach of campus as well as with good access to shops and other amenities. It’s important to note that ‘easy reach’ of campus doesn’t necessarily mean ‘in close proximity of’, for example apartments that are further away from campus but that have good access to public transport, may turn out to be just as appealing to students, while costing the investor less and generating a higher percentage return. A private investor willing to get his hands on this attractive market may also consider buying student houses or communes, but they should first understand the challenges involved in managing such properties.
Student accommodation is a fast growing, highly in demand market, but when calculating potential returns be sure to include rates and taxes, sectional title levies, insurance, maintenance, advertising and any management fee.