Is student accommodation a good investment in 2022?

Article summary

• Following the lockdown period, students are returning to universities, but demand for accommodation outstrips supply.
• Investors looking to take advantage of this demand need to know what kind of properties students are looking for.
• Improved public transport has allowed for students to be situated further away from their colleges than in previous times, making investment in more remote areas an option.

The closure of campuses during the height of the pandemic meant less demand for student accommodation, but that’s all changing now, as students get to return to universities. Now the demand is outstripping supply, which makes student accommodation an opportunity for investors.

Demand for student accommodation is on the rise

There has been an increase in student enrollment for South African universities, but data shows that there is not enough accommodation to satisfy the demand. 

According to the International Finance Corporation (IFC), there is a shortfall of more than 500 000 beds.

Affordability is an issue

Affordability was a problem for students even before the pandemic. According to iol.co.za, the estimated cost of financing a student bed is R54 000 a year, but students funded by the National Students Financial Aid Scheme only receive between R31 000 and R35 000 a year for accommodation.

What investors should be looking for

In order to satisfy demand, many developers are building properties that cater to the needs of students. 

Students tend to have the following priorities when seeking accommodation:

• Security measures, such as biometric access.
• Fast internet.
• On-site communal spaces, such as coffee shops.
• Easy access to facilities such as on-site gyms.
• Access to public transport.

Sectional title properties are especially desirable, as they allow for on-site facilities, and the sharing of space with other students.

Improved public transport has made it possible for student accommodation to be based further away from the actual university. For example, in the case of the University of Cape Town, accommodation has traditionally been sought in Rondebosch and Rosebank due to their close proximity. However, the Jammie Shuttle service means UCT students can now be based as far away as Observatory, Mowbray, and even Kenilworth.

Another tip for investors…

It’s recommended to ensure that the student’s parents co-sign the lease, as this means they will receive any notifications of overdue rent or property damage. In many cases, the student’s parents will be funding the rental anyway.

If you’re an investor looking to help satisfy the demand for student housing, ooba Home Loans can help you secure the best deal by submitting your bond application to multiple banks, thereby allowing you to compare packages, and select the one best suited to you.

We also offer a range of tools that can make the home buying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.