Real Estate Investor Magazine South Africa Real Estate Investor Magazine - August 2017 | Page 30

STUDENT ACCOMODATION
A New Asset Class for Investors
Exponential growth in student market
BY MONIQUE DU TOIT
S
outh African students and their parents
have great difficulty in finding suitable
accommodation ‒ a place where facilities are
safe, modern, and convenient. The process of finding
suitable accommodation, dealing with multiple letting
agencies, finalizing paperwork, and moving in can be
extremely stressful and time‒consuming.
Says Leon Howell, MD of CampusKey:
“Educational institutions throughout South-Africa are
facing the ever-increasing shortage of accommodation
for their students. Many of these have already reached
student accommodation crisis levels.”
According to Howell, studies have shown that
students staying far away from campus or in unsafe,
overcrowded or unhygienic conditions will have a much
higher chance of dropping out, especially in their first
year. “It’s widely agreed that the severe shortages of
student accommodation at educational institutions is
compromising educational outcomes in South Africa.
There is much written about the crisis in this sector, with
social, political and economic aspects playing a role.”
Howell adds that this environment has changed
28
AUGUST 2017 SA Real Estate Investor
dramatically over the past 20 years. “Student numbers
have grown to over a million students at 26 institutions.
With the further decline in city spending in this sector,
further pressure is put on universities. One thing is
clear - student numbers continue to grow, leading to an
increase in the demand for student housing.”
According to statistics from the Department
of Higher Education, out of a student population
of approximately 530 000, there is currently only
enough student accommodation for 100 000 students.
According to the Department of Higher Education’s
Ministerial Review of South Africa’s University
accommodation, less than 10% of first-year university
students can be accommodated.
Various challenges in addressing the major student
accommodation shortfall in South Africa stand in the
way. Howell continues: “High maintenance costs,
ageing residence buildings and inadequate space
on campus are some of the main contributors why
educational institutions are not building more student
residences on campus. This has created the opportunity
for private developers and investors to get involved.
www.reimag.co.za