Why student accommodation has become a real opportunity for investors.
In recent years student accommodation has come to present a real opportunity for investors. As it is predominantly a segment that covers smaller properties with good returns, it has some ideal characteristics.
“The key factors making student accommodation attractive are the high demand and the stable income generation it gives, due to low operating costs,” says Lesiba Mooka, CEO, Cobalt Blue Properties.
“Institutions aren’t able to provide sufficient accommodation for all their students and this has opened doors for investors to enter the market.” Mooka points out that the University of Johannesburg can only accommodate 6,500 students, and Wits 5,000, but each institution has an estimated 30,000 students or more on their main campuses.
The most important considerations when looking at potential opportunities in student accommodation are the proximity to the university and public transport access, security, the condition of the building and, of course, the price.
Mooka says that for one- or two-bedroom flats, investors should be able to find properties for about R450,000. These could realise rentals of between R4,000 and R8,000 per month, depending on the number of beds per room. The alternative is to pay about R900,000 for a standalone house. Rentals of between R15,000 and R20,000 per month could be achieved, depending on the number of rooms and tenants.
This article originally appeared in Neighbourhood, Sunday Times.