Real Estate Investor Magazine South Africa March 2013 | Page 33

RESIDENTIAL
Denise Viljoen, GM of Private Student
Accommodation, answers some
questions on student letting.

greener energy solutions as well as restrictive
measures on utilities consumption such as postpaid electricity meters per bedroom.
The standard student enters into lease
agreements of 11 months (NSFAS 10 months)
thus causing a standard vacancy of 1-2 months
on the property. It is not often that you will
enter into a 12-month lease agreement, thus
provision for vacancy needs to be built into your
cash flow model.
Landlords housing NSFAS students that are
located more than 2km from the university, now
also need to provide daily transport services, an
additional cost that needs to be budgeted for.

Key features that students require in
a property

Letting agents

Your hotspot areas would typically be located
within a 2km radius around the major national
campuses.
Western Cape and Potchefstroom properties
demand a much higher average rental due to
limited supply, specifically in areas such as
Stellenbosch. In these areas it is common place
for parents to buy a student property whilst their
children are still studying. These areas also have
a much higher entry price point yielding a lower
return when compared to properties in Gauteng,
Kwazulu-Natal and Bloemfontein. Factors to
consider would be capital appreciation of the
property vs income yield.

When investing in student accommodation
it is important to employ a reputable and
specialist letting agent that understands the
student accommodation environment with all
of its challenges. There is a big difference in
managing a townhouse occupied by a family
vs a student commune/residence occupied by
multiple students.
Regulations with regards to noise control,
health and overcrowding and the management
thereof become applicable. Properties can be
forced to close down if these regulations are
not met.
The effective management of securit y
deposits, compliance with the EAAB, the
Rental Housing Act, FIC Act as well as
financial and performance reporting are all
items to look for in a letting agent.
Understanding the local pricing environment
and the required accommodation needs are
integral qualities of the agent. Some areas have
a much larger need for shared accommodation
and other areas require more upmarket
and private accommodation. Post graduate
candidates and visiting lecturers come with
their own requirements.
www.reimag.co.za

Most students require a room that is semifurnished (bed, desk, wardrobe, curtains).
Communal washing, bathroom and cooking
facilities are the order of the day. Typically price
points for private accommodation (cottage, flats)
will be much higher than communal living. The
provision of Internet services on the property
has now become a reality. Walking distance
to the institution carries a price premium. The
provision of transport services is required if the
property is more than 2km from the institution.

Hotspots

What do students want in
accommodation?
First of all safety and security especially in
the current climate of crime in SA. Student
houses have become a soft target for
criminals who know that students tend to
be laid back, also that some students have
classes at night and have to walk back home.
Secondly properties within walking distance
to their institution, some students do not
have access to their own transport and don’t
want to pay extra for public transport.
What makes them prefer one place to
another?
Some key factors are visible security (eg,
electric fencing, panic buttons, razor wire,
fencing, outside lighting) and walking
distance to their institution. Cleanliness and
tidiness and good maintainance.
What are added extras that students
request?
DSTV, Internet access, cleaning service,
maintenance service, furnished
accommodation.
Where is there a need for accommodation?
Anywhere in SA where there is a study
institution, a lot of service providers
(accommodation) cater for the larger
institutions but tend to forget about the
smaller ones (eg, private colleges, IT colleges).
What areas are the most popular?
Areas adjacent to their institution.
What is the average price that investors
get when letting to students?
Difficult to say as prices vary, depending
on the availability of accommodation,
area, city, institution ect (eg, for a room
in Bloemfontein R2000.00 pm and the
same room in Stellenbosch would get you
R3000.00 pm).
What risks do they carry when letting to
students?
Student accommodation is a seasonal
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