Students fuel rental demand

Denise Mhlanga
07 January 2009

Residential letting agents get set for bumper season, as demand for student accommodation in some areas outweighs available supply.

Estate agents in areas located close to universities and other higher learning institutions say 2009 should be a good year, with high demand for student accommodation already being experienced.

A week into 2009, already some 400 university students in Johannesburg have secured accommodation outside of campuses and the number is set to increase come February when universities open.

That's according to Richard Rubin, chief executive officer of Aengus Property Holdings. He says there is huge demand for accommodation in Braamfontein and surrounding areas and limited supply.

Students renting out properties during the year include local and international students, the latter largely from the African continent.

"Since we opened for the year, already we have taken 400 students for the available properties," he said. He said January and February are always the busiest months in the year and students sign leases of 10 months.

Basically, the student market is the best place to be as there is guaranteed rental income for 10 months and when students like the places they rent, they usually renew for the following year, according to Rubin..

Asked about rentals, he said they range from R2 000 and R2 500 a month with two students sharing in most cases. "This is a good part of the market and investor returns are far better than the residential property market," said Rubin.

Daphne Timm, principal of Pam Golding Properties in Grahamstown, said Rhodes University and schools in the area have generally always kept the residential market going.

Despite new developments in the area, there is never enough student accommodation available.
"The student property market is definitely buoyant - just not enough stock to meet demand," said Timm. Rentals range from R1 500 and R2 200 for a room.

In some parts of Cape Town, parents sign annual leases for their children. Some are prepared to pay as much as R8 000 per month on rentals for upmarket apartments. Kevin Crassord, estate agent at Just Letting Atlantic Seaboard, said student rentals make up about 5% of the total lettings, though offerings on this side of Cape Town and they tend to be very expensive compared to student accommodation elsewhere. Average rentals are between R7 000 and R8 000 a month and the cheapest accommodation is R5 000 per month for a one-bedroom apartment.

Fred Johnson, estate agent at Tyson Properties Westville, Durban, said as universities keep expanding demand for accommodation will be continue to pick up. He said, in Westville, there are small rooms priced at R1 800 a month, while upmarket student accommodation costs from R4 500 per month. The granny flats in most areas are used as student accommodation and as long as they are priced right and suit students' lifestyles, they would be rented out.

"The student market is doing well, and prices are steady with a good supply of accommodation," said Johnson.