Student accommodation is a sound property investment | Private Property

Student accommodation is a sound property investment | Private Property

Private Property South Africa
Cathy Nolan

Private residences are being inundated with applications for student accommodation this year, amid shortages of residences at tertiary institutions.

“We are fielding an unprecedented number of calls from students who are desperate for quality, affordable accommodation close to campuses,” says Rob Wesselo, managing partner at International Housing Solutions (IHS), which has one of the largest private student accommodation portfolios in South Africa.

Wesselo says that, as students get ready to go to universities and colleges, thousands are realising that securing a coveted place on a tertiary campus is just the first hurdle, and that finding a place to live and study poses a challenge of its own.

Because of the huge and growing demand, IHS is dedicating a significant chunk of its second fund to ensuring there is a greater supply of student housing units. The global private equity investor expects this strategy to deliver returns in excess of 20%.

IHS has launched its second fund, IHS Fund II, in the wake of the huge success of its first fund, the South African Workforce Housing Fund, which enabled the large-scale development of affordable housing.

According to the Department of Higher Education’s Ministerial Review of South African university accommodation, less than 10% of first-year students can be accommodated. Much of the on-campus accommodation is dilapidated, unhygienic and unsafe.

The latest statistics also show a shortfall of 207 800 university beds and this does not include the shortfall in accommodation for private tertiary institutions.

An estimated 400 000 students are enrolled at further education and training (FET) colleges, most of which don't have any accommodation on campus. The lack of adequate and affordable student housing results in students renting inadequate accommodation off-campus, in locations that are often in appalling conditions and overcrowded.

Of great concern is that the poor living conditions of students have been linked to high drop-out and failure rates as these conditions aren't conducive to studying and good health.

“Although student housing also offers excellent opportunities for investors, it must be approached through a sound strategy to mitigate any sector-specific challenges,” Wesselo says.

Looking for a new tenant?

Advertise your property to rent FOR FREE quickly and easily on our website.

Find out more


Found this content useful?

Get the best of Private Property's latest news and advice delivered straight to your inbox each week

Related Articles

6 surefire ways to create wealth through property
How to create wealth when others see distress The most frequently asked question I get from investors is “when will the market recover?” My stock answer is, “why is that important to you?” ...
Good rents increasingly attracting investors – but beware the pitfalls
The two fundamental aims when investing in property are still, as in any asset purchase, to achieve capital growth and to create an income stream.  Although property investors should, however, clarify in their minds as to which ...
Property Buyer Show 2018 Cape Town | How to successfully invest in property
Private Property chats to Neale Petersen, Founder and Publisher of Real Estate Investor Magazine, who shares his top tips on how to successfully invest in real estate.