WORDS: EDITORIAL TEAM :: IMAGES: SUPPLIED
The current oversupply of office space presents a unique investment opportunity in South Africa’s under-supplied student accommodation sector.
South Africa’s persistent shortage of student accommodation has evolved from a mere trend to a longstanding challenge, with over a decade of understocking. According to Norman Raad, CEO of Broll Auctions and Sales, the scarcity of affordable student housing close to tertiary institutions remains a pressing issue, but also offers an opportunity to real estate investors.
The 2021 International Finance Corporation Report revealed that South Africa’s student housing sector faced a potential deficit of up to half a million beds. This shortage prompted property companies like Growthpoint to invest in student housing projects to counter downturns in other property market sectors. Earlier this year, Higher Education Minister Blade Nzimande estimated the shortfall at 400,000 beds.
“Investors with a vision can currently snap up underutilised buildings such as office blocks at attractive prices, and convert these into cost-effective student housing offering stable returns,” Raad says.
COST-EFFICIENT SHARED SPACES
Shared housing options maximise space efficiency, accommodating more students in a smaller area, which reduces costs. “Students have either their own or a shared bedroom, along with communal spaces like living rooms, kitchens and bathrooms,” Raad says.
Broll is currently offering a seven-bedroom property just 500m from the University of Johannesburg. It can house 14 students, along with an adjoining cottage. “Properties like these require proper paperwork, such as commune operating permissions, which this particular property already has,” Raad says. Communes also create a more social environment for students.
MIXED-USE SPACES
Today’s students desire to be in the heart 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.”
In Cape Town’s Rosebank, a fully-let mixed-use student property within walking distance of the University of Cape Town is currently on auction. It features two houses with eight en-suite rooms, seven two-bedroom apartments, and a retail store. “Such prime student accommodations align with the high demand for student housing in the area.”
APARTMENT BLOCKS
Pretoria has student accommodation nodes centred around the University of Pretoria and UNISA, such as Brooklyn and Sunnyside. A rarely-seen investment opportunity is the seven-storey Berg en Dal block, featuring 63 flats in Rissik Street, which went under the hammer by Broll in October. “This building has the potential to be transformed into a ‘new-age’ student accommodation facility offering amenities like Wi-Fi, a gym, a swimming pool, shared relaxation areas and braai spaces,” Raad says.
For property investors aiming to build resilient portfolios capable of withstanding economic downturns, student accommodation offers a lower-risk, lower-reward investment opportunity. It remains a resilient asset class, Raad says.
