Tuesday, November 9, 2010

Buy student accommodation for good returns

By Landlord SOuth Africa

Published: November 8, 2010

With matric learners now in the throes of final exams, many parents are once again facing the problem of finding suitable away-from-home accommodation for children who plan to go to college or university next year.

But the problem is turning out to be an opportunity for property sellers in residential areas close to tertiary education institutions, says Richard Gray, chief executive of Harcourts Africa, who explains that increasing number of parents are realising that it is possible to provide suitable and stable accommodation for students and benefit from a shrewd investment decision at the same time.

“Indeed, we see a quite a new trend emerging of families buying a second property close to a college or university rather than a holiday home, say, or a rental property elsewhere. And the reason is that they have worked out that such purchases will provide students with off-campus ‘digs’ that are a cost-effective alternative to residences or rented rooms and flats, and will usually prove their worth as pretty canny investments as well.”

Parents whose children have finished their studies, he says, can usually find a ready market for these second properties among the parents of incoming students, and make a good profit on their initial outlay.

“Increasingly, though, we see parents retaining these properties and using them as the means to give their newly-graduated children a head start in their careers – as assets that can be rented out to generate an additional income, or that they can live in themselves while they get established, or that may serve as security for a loan needed to start a new business or professional practice.

“In this way, their investment becomes the ‘gift that keeps on giving’ and proves its worth over and over – while also helping more young people to achieve home ownership and contributing to the rejuvenation of many areas around colleges and universities by a new generation of residents.”

Areas where this trend is already clearly evident, says Gray, include Observatory and Rondebosch in Cape Town, Auckland Park and Richmond in Johannesburg, Glenwood and Umbilo in Durban, and Arcadia and Hatfield in Pretoria.