EDITED BY THE EDITORIAL TEAM :: PHOTOS: SUPPLIED
With another Monetary Policy Committee (MPC) meeting this month, it’s becoming harder and harder to find fool-proof investments. However, student accommodation remains one of the closest options to a bullet-proof investment.
According to the International Finance Corporation, there is a projected national shortfall of nearly 800,000 beds in student accommodation by 2025. As a result, student accommodation has become one of the most recession-proof, interest rate-proof, and resilient property investments in South Africa.
This is particularly evident in Johannesburg, where numerous tertiary education institutions exist, making the income stream from these investments as reliable as death and taxes, says High Street Auctions director Greg Dart.
“Especially with the involvement of the National Student Financial Aid Scheme (NSFAS) from the Department of Higher Education and Training, rental payments for bursary recipients living in registered residences are guaranteed by the government. Moreover, the rental allowances for university students living off campus match the on-campus residence fees charged by their tertiary institutions, as stated on the NSFAS website.
Many more options
Dart says while many student accommodation landlords opt for NSFAS-aligned fees, the potential is much broader. The combination of a significant shortage of beds and demand driven by specific features opens a wide range of income possibilities, particularly for developers.
“Standard student accommodation choices in Johannesburg range from six-bed dormitories to single rooms, with prices from R2,000 to R7,000 per month, but these usually come with communal bathrooms, kitchens and living areas,” he says.
However, if developers can find buildings with conversion potential near large tertiary institutions, the possibilities become limitless. For example, incorporating cleverly-designed micro-apartments into renovations can significantly increase income. “In Johannesburg, micro-apartments are highly sought after as student residences, commanding a premium in the private market. These mini studios often feature private ablutions, basic cooking facilities, and multi-purpose spatial functionality, with monthly rentals easily exceeding R10,000.”
Privacy is key
“What drives this market segment is students’ desire for the levels of privacy they enjoyed while living at home, particularly regarding bathrooms. Parents, on the other hand, seek assurance that their children have 24/7 security, uncapped Wi-Fi, reliable transport links to and from university, and are surrounded and supported by an education-focused, like-minded peer group.”
St Andrews student accommodation in Marshalltown, Johannesburg
Options to consider
Dart mentions the following lucrative student accommodation investment opportunities going under the hammer on 20 July:
- 39 Rissik Street in Marshalltown is a must-bid for investors seeking a turn-key solution. St Andrews is an 11-storey building with five retail outlets on the ground level and 101 upmarket furnished student units from the 1st floor to the rooftop. Each refurbished floor is equipped with communal bathrooms and modern kitchen facilities. St Andrews has a capacity of 352 beds which are fully let and occupied by students from various institutions. Amenities include 24-hour manned security, CCTV, uncapped Wi-Fi, and laundry facilities.
- 23 Commissioner Street in Ferreiras Dorp, Johannesburg is another gem for developers looking for a student accommodation conversion opportunity. The portfolio for sale comprises three buildings: Eadie House, Orient House and the Market Street Parkade, encompassing an entire block of Johannesburg’s CBD. The precinct is anchored by over 20 retail units, and the 80 residential apartments on top are ripe for conversion into student units. The unique selling point of this lot is the 120-bay parkade; ample secure parking that commands a premium in the area.
Ferreiras Dorp Precinct in Johannesburg
