JHB Student Accommodation Boom

12 May 2010


Property markets in Johannesburg areas such as Richmond, Auckland Park, Westdene, Braamfontein and even further afield in Yeoville and Rosettenville are straining to meet the demand for students' accommodation.

Servicing tertiary institutions, such as Wits and the University of Johannesburg (formally RAU and Wits Tecknikon), these areas are enjoying the spinoffs of expanding student populations says Brian Lovell of leading local agency Homenet Leaders.

"Factors such as a shortage of land for additional development and the influx of home offices and service industries to support demographics are also underpinning the market in these areas," he says.

"These are older suburbs but basically they are being re-invented in the process of becoming 'student city.' As a result, there is strong demand for apartments as well as houses that will accommodate students on a communal basis."

A case in point is the Calais complex in Montgomery Park, around the corner from the University of Johannesburg, which is comprised of about 200 one and two-bedroom apartments. "Five or six years ago, a one-bedroom unit in this complex would have sold for about R130 000 and a two-bedroom version for R180 000. Today they are fetching around R380 000 and R480 000 respectively."

In fact, prices for student type-accommodation in this part of the city have generally doubled in the past three years, despite a spate of purpose-built new development, and expectations are that they will continue to escalate, although perhaps more slowly now that the University of Johannesburg is rumoured to have plans of its own for building rentable student accommodation in Melville.

Says Lovell: "The rationale for investing in flats or larger homes to house students is inescapable. Parents will have to pay for student accommodation whether they own it or not. It simply makes good business sense to direct those resources into something that will, in all likelihood, provide a financial return at the end of the students study period.

"And the returns have been excellent, although they may be leveling off to some extent, perhaps for no other reason than that the banks will not continue ad infinitum to provide financing where they cannot see endless increases in values.

"Having said that however, once the property market in general resumes its strong growth, as is generally anticipated, so too will student-orientated properties and for the investor with a medium to long term view, that means an excellent opportunity."