Gap housing enhances wealth creation

18 Apr 2013

The latest research into the provision of affordable housing in the so-called gap market in South Africa shows that it not only brings with it improved welfare and social cohesion, but is also an important facilitator of opportunities and wealth creation.

The latest research into the provision of affordable housing in the so-called gap market in South Africa shows that it not only brings with it improved welfare and social cohesion, but is also an important facilitator of opportunities and wealth creation.

The study found that those who obtain homes in this sector move beyond viewing them as a mere shelter.
Instead, their homes become assets and through appreciation of these assets entrepreneurship, job creation and/or access to higher levels of education are stimulated.
The research was conducted by a team led by University ofCape Town associate professor Francois Viruly.
It is the second such study commissioned by International Housing Solutions (IHS), a global private equity investor which has pioneered the financing of numerous affordable housing projects in South Africa with a total value of almost R8 billion to date.
The primary focus of the research was to assess the direct and indirect benefits to tenants and owners of housing units provided by IHS, to assess the social and economic benefits of living in developments like these which are changing the face of SA suburbs.
The study also aimed to establish whether such affordable housing developments meet the objectives of government policy regarding sustainable human settlements.
The research was expanded this year to include some 500 households across more than twenty different developments.
The survey also considered the views of students who this year made up 17 percent of the respondents.
Affordable housing refers to households with an income between R3 500 and R18 000 per month.
People in this segment earn too much to qualify for government’s low-cost subsidised housing and too little to afford the cheapest standard private sector houses or to qualify for bonds. This is why it is known as the gap market.
The report points out that according to Absa’s March 2013 House Price Index report, small houses (80-140 square metres) have the highest price appreciation at 17.5 percent nominal growth annually.
Houses in this category (and smaller) make up the majority of IHS units with households falling in the affordable housing band having incomes of between R7 500 and R15 000 per month.
Among the major reasons listed by respondents for moving to an IHS funded development was a desire for better access to their places of work, an improved and safer environment, proximity to schools, and financial considerations.

This year’s study also corroborated last year’s findings that the construction of houses in the affordable housing developments of IHS created over 51 000 direct and indirect jobs.

Looking at the welfare improvement of respondents, the study found that overall 72 percent thought their quality of life had improved while only 3 percent of respondents believed their life had worsened to some degree.
The biggest improvements were noted in respect of leisure time, social life, health, access to education and employment opportunities.
An important factor impacting on people’s decision to move to one of the developments included in the research was the ongoing discriminatory impact of apartheid-era spatial planning on household transport spending.
In Gauteng, research shows people spend 21 percent of their income on transportation, which is among the highest in Africa and more than double that of most other major African urban areas.
Commenting on the research findings, IHS managing partner Soula Proxenos says while government’s RDP housing initiative has been a unique and successful programme, there was a need to fix the whole housing spectrum.
“Housing is like a ladder, if there are rungs missing, the ladder is broken.”
Proxenos says creating housing stock in the gap market gives previous RDP households housing to move up to.
If there is nowhere for these families to go to then they are not able to improve their lot and new families then are not able to move into previously used RDP housing.
“Government cannot fix the whole housing ladder and the gap market is ripe for private sector development, especially of the right kind of sustainable initiatives which allow more people to join the formal housing ladder in the affordable housing sector”.
She says traditionally housing in the lower end of the market offered only a shelter role, but housing in the affordable sector enables a broadened role.
“Housing becomes an asset that appreciates, stimulates economic activity and creates wealth. In the USA it is the single biggest source of funding for new business creation.”
She points out that the units play a role as a financial asset and a majority of those interviewed during the research believed the value of their assets had indeed increased.

Viruly says that increasing the affordability of housing as an asset together with the appreciation of this asset should in turn stimulate increased entrepreneurial activity as well as access to higher levels of education.

Viruly says that increasing the affordability of housing as an asset together with the appreciation of this asset should in turn stimulate increased entrepreneurial activity as well as access to higher levels of education.
According to the Global Entrepreneurship Monitor Extended Report – 2011 published last year, 9.1 percent of adults aged 18 to 64 in South Africa are involved in early-stage entrepreneurial activity with 2.3 percent being established business owners compared to 12.3 percent and 9.1 percent respectively in the US.
Increasing entrepreneurship in South Africa through affordable housing will also lead to increased employment as entrepreneurship has been shown to be a key contributor to job growth globally.
In the US it has been the primary source of job growth for the past 30 years.
This year’s study also corroborated last year’s findings that the construction of houses in the affordable housing developments of IHS created over 51 000 direct and indirect jobs.
Over the 10-year life of the IHS fund some 100 000 man years of employment will have been created.
During the past two years affordable or gap housing was given increased prominence by government. Various programmes and subsidies have been established and many related issues – also those covered by Viruly’s research – are included in the National Development Plan.
Government’s “Breaking New Ground” policy is focused on increased housing delivery; housing as an asset, creating sustainable human settlements where housing developments are integrated with social infrastructure, creating employment; and creating social cohesion.
Viruly’s research supports government findings that massive urbanisation was constantly adding to the housing backlog which includes the gap market. Gauteng’s population, for instance, could increase by a further 10 million people over the next 30 years.
A specific need for affordable housing for the urbanised and urbanising middle class has thus been identified, which government alone cannot address and for which private sector participation is crucial.

Landlords not to blame

Northcliff Melville Times 9 April 2013

Jeanrique Snyman

Jeanriques@caxton.co.za

NMT Times

STUDENT landlords need to be commended for their efforts in contributing to the evolution of South Africa and progressively addressing a severe challenge in affordable housing nationally, said chairman of the University of Johannesburg Accommodation Executive (UJAX) Caj van Zyl. Van Zyl was responding to news that fraudulent documentation had enabled the accreditation of communes belonging to a single owner (UJ turns a blind eye to commune fraud, week ending 29 March).

"The committee was established to deal with the challenges, opportunities and threats regarding student accommodation for UJ students. We are all forward thinking, qualified and progressive with our thoughts, strategies and the implementation thereof," he said.

An accommodation provider for over 20 years, Van Zyl conceded that there were still kinks in the system,

but defended commune owners who in his view had done much to improve the quality of accommodation

available to students.

"Serious questions are being raised about the enforcement of the commune policy to address the housing challenges that are facing us. We agree with the standards that are proposed but not with the implementation thus far with respect to the application procedure and related costs.

"Previously run down properties have been renovated at extensive cost to provide quality accommodation to

the next generation of our country. These investors and entrepreneurs are proactive and are helping to address a serious South African problem and challenge," Van Zyl said.

"The inefficiency of the City of Johannesburg (COJ) to speedily process applications , removal of red tape conditions, consistent negative and inaccurate press is not assisting the challenge."

Ward 69 councillor Katja Naumann agreed.

"To date UJ has accredited far over a hundred communes for 2013 but only 32 of those communes have been granted legal consent by COJ." Naumann also took flak for a misconstrued comment.

"My comment that 'UJ has lost the plot' was construed from a conversation in which I commented on the accusations and counter accusations involving a fraud case being investigated by the UJ Office of Off - Campus Accommodation and was most certainly not aimed at the larger institution," she explained.

Student accommodation solutions

Property 24.co.za 
28 Mar 2013

Partnerships between the private property sector and the country’s academic institutions is a credible solution to providing safe and affordable accommodation for thousands of students, says managing director, Kirstin Schubach of student accommodation specialists, the Aengus Property Group.

Salvation Mansions in Durban is one of Aengus' properties.

Schubach was commenting after shortages of student accommodation led to protests at the University of KwaZulu-Natal (UKZN) when hundreds of students were left on the street. UKZN registers up to 44 000 undergraduate and postgraduate students each year, but can only provide accommodation for 10 917 students - about 25 percent of its student body.

“Universities around the country are suffering from a shortage of student accommodation, mainly because of the massive investment needed to build and maintain student residences and the surge in the number of students attending tertiary institutions,” says Schubach.
According to Schubach between 50 and 80 percent of students attending these institutions require accommodation, but there simply aren’t enough beds.

Aengus currently owns and manages 30 student buildings around the country.
In Durban, it has spent more than R4 million converting old buildings into stylish student accommodation.
It owns and manages three buildings near the Durban University of Technology and plans to open another, Aengus Doonside, near UKZN in May this year.

This can accommodate another 154 students in two and three-sleeper units.
“Students are discerning consumers and are increasingly looking for clean, safe accommodation with all the modern conveniences at an affordable price,” says Schubach.
She explains that their model is aimed at enabling students to work and play in a way that they’re able to get the most out of their tertiary education.

Aengus is renowned for successfully pioneering the conversion of mothballed commercial buildings aroundSouth Africa into upmarket loft-style apartment buildings in close proximity to universities.
 Its units are fully furnished and kitchens fitted with fridges. To keep globally connected, each unit comes standard with Wi-Fi and free access to 300mb of data per month. Technology extends to security features, with buildings equipped with fingerprint access control and a 24-hour guard.
“The result is that our buildings in KwaZulu-Natal are fully tenanted, we operate a tight ship, with stringent tenant selection criteria and governing rules for these buildings.”
All buildings are situated close to academic campuses, saving students and parents monthly transportation costs.

The buildings are maintained by Aengus Portfolio Management, a division of the Aengus Property Group, which has an impeccable track record of managing its students and keeping the buildings in good condition.
Students can expect to pay between R1 800 and R2 350 per month on a 10 month lease.
“There is clearly a dire shortage of decent student accommodation at South Africa’s tertiary institutions, but private players with property management experience and the balance sheet to invest in upgrading and maintaining buildings can positively contribute to improving the situation,” says Schubach.
She adds that this approach also frees up universities' budgets and enables institutions to focus on their core business – educating students.

Property

Author: Micel Schnehage - Moneyweb.co.za

Student housing: An investment opportunity?

Long-term investors stand to benefit.

JOHANNESBURG – Property developers, investors and parents are taking advantage of a massive backlog in student housing to enter what could potentially be a lucrative investment.
There also appears to be a growing trend in the number of private investors and parents climbing on the bandwagon by buying residential units to let out to an annually growing number of students signing up for tertiary education.

This is especially true in academic hubs like Potchefstroom in the North West province, Stellenbosch in the Western Cape and Grahamstown in the Eastern Cape.

Principal of Independent Property Consultants (IPC), Monika Gaybba, says in the past three or five years, Grahamstown has seen a plethora of student developments but these have slowed down considerably. This means, however, that the town now has a healthy supply of potential student housing investments.
Gaybba says prices and rentals on student accommodation vary:

• R485 000 for a 39m² one-bedroomed unit close to Rhodes University with a rental return of around R3 800 per month;

• R800 000 for a 50m² two-bedroomed unit with an income of R6 048 per month, and

• R950 000 for a 93m² three-bedroomed flat with a rental income of around R7 500 or more monthly

Gaybba says properties in Grahamstown have increased in value over a three to five year period which means that parents have not only recovered their money from their initial investment but have saved on accommodation for their student children. “Some parents sell the units once their children leave the university and some retain their investment and purchase other property to increase their portfolios with a variety of rental options. This is also due to confidence in the local market,” Gaybba told Moneyweb.
She added that investors comprised local, national and international buyers, including the parents of students. Others included academics, business or retirees seeking a good return on their investment. “The number of rental defaulters on students is less than on other residential properties being leased as students usually have a set rental budget,” said Gaybba. Many students are allocated fixed budgets in terms of bursaries and other financial assistance.

Pam Golding Properties’ (PGP) director Boland and Overberg, Louise Varga, says in Stellenbosch there are 12 700 investment opportunities in student accommodation with 6 000 of them being in the sectional title sector. “That tells you how huge the apartment market in Stellenbosch is,” Varga told Moneyweb at the annual Pam Golding media day in Cape Town on Wednesday.
Varga says the infamous town of Stellenbosch experiences an annual “apartment season” starting largely in September through to November where owners of these apartments wanting to dispose of their assets put properties on the market and those seeking student housing put in offers, including parents of prospective students.

“If you put in an offer in September, then you have October, November, December for transfer,” Varga said. Rental renewals usually occur in the same preceding months for the following year. Those choosing to hold onto their investments can then sign new leases in December for the following academic year.
Prior to the 2008 global economic meltdown, Varga said buyers were mostly investors seeking a yield on their investment. “Right now, we have more parents buying than investors,” she added.
Asked what the rough return on investment was on student accommodation in Stellenbosch, Varga replied: “You will buy a two-bedroomed apartment very close to the campus, let’s say for R1.5m and you will only rent it out for let’s say R8 000 a month. If you go and borrow R1.5m from the bank, your bond payment will be R15 000.”

So investors hoping to make a quick buck will be out of luck. Investments in Stellenbosch properties for rental to students will need to be long term.
The average turnaround time for selling property obtained by parents with a view to getting a return on their investment is seven years. “Now if you have a child (at university) and the rent you are paying is basically just your rent and you sell that apartment after seven years, you will most probably end up with your capital growth that you’ve earned and that’s paid for your child’s education. That is why parents are still buying”.
Students going to varsity and those leaving annually is tantamount to a constant flow of supply and demand, making this market a lucrative one. What has also happened in many instances is that demand has outstripped the supply due to an increasing number of students enrolling for tertiary education. This has in some cases, certainly in Stellenbosch and Potchefstroom, led to prices skyrocketing.

Varga points out that having, for example, two offspring at varsity at the same time, could set you back R8 000 a month which amounts roughly to an R800 000 bond.

While cities like Potchefstroom have in many ways been able to expand, towns like Stellenbosch are limited because of the surrounding winelands making expansion impossible. These are factors that lead to even higher price hikes in terms of demand and supply.
A ministerial committee on student accommodation recently released a report on the growing need for housing, saying of the 530 000 scholars who registered in the past year or so, universities were only able to provide lodging for 100 000 students or 18% of those who registered.
Dawie de Villiers, chairman of MidCity which services the Gauteng region says student accommodation is turning into a niche market. De Villiers says some developers are entering into partnerships with universities like Tukkies in Pretoria and the University of Johannesburg (UJ) in providing adequate student accommodation.

There also appears to be a move away from the dormitory-like housing of yesteryear making way for so-called student villages comprising suites of three, four or five bedrooms, a kitchen, lounge and ablutions.
De Villiers says while MidCity’s developments comprise suites of between three to five bedrooms, all students have their own rooms. The studios are all fully furnished and equipped. “They just arrive with their bedding and clothes.” This type of accommodation typically costs around R2 500 a month.
Another R300m student village known as the Ekhaya Junction is currently under construction, also in Johannesburg. The project is being undertaken by Junction-S which is a joint venture between Citiq, Jika Properties and Lapalaka Developments.

It services UJ, the University of the Witwatersrand and the Tshwane University of Technology. It’s being financed by Futuregrowth, a division of the Old Mutual Group.
Junction-S director, Cornelius Mokone, says student accommodation is a growing phenomenon due to demand. In many instances traditional residences provided by tertiary institutions in the past had fallen into disrepair and were costly to renovate.
Mokone said many parents had taken it upon themselves to purchase residential units ahead of their children going to varsity with a view to letting them once their offspring had graduated. This has led to prices near these places of learning to skyrocket.
It has also provided developers and investors with an opportunity to invest in a growing market. This phenomenon is not unique to South Africa with developers in the Netherlands, for example, turning to discarded freight containers to create funky student villages.
The Ekhaya Junction is about five kilometres west of the Pretoria CBD and will house 2300 students upon completion at the end of 2014. The village will include free wi-fi, study rooms, convenience stores, eco-friendly water heat pumps, laundry facilities, cleaning and maintenance and 24-hour security.
This is very much in line with similar projects elsewhere in Gauteng. Mokone says similar to a townhouse complex, students will be able to choose between two and six-bed units with communal kitchens and accommodation in both shared and single rooms.
De Villiers says strict rules currently apply and will apply in all of its student facilities. House mothers and fathers are in charge, security is tight and troublemakers will not be tolerated.
In the education hub of Potchefstroom Jaco Faurie of RealNet Properties says student housing, which comprises mainly units in complexes near the North West University which is situated in The Bult precinct, vary in price range with those closer to the place of learning being far more expensive than those on the outskirts of the university.
Faurie says the more luxurious units have been priced at around R18 500m² while the less lavish ones have been evaluated at R14 000m².
He says investors have shown a keen interest in acquiring student accommodation as there is still room for growth: “…an older two-bedroom unit selling for R665 000 will quickly draw tenants a monthly rental of around R5 000. An investor who paid a 20% deposit would thus comfortably cover his bond of about R4 600 per month and the monthly levy of around R350 with his rental income.”
Property and development company, Aengus, says it has a rapidly growing portfolio of student flats in Johannesburg, Durban and Port Elizabeth that is has created largely by refurbishing existing mothballed office blocks. Rentals for Aengus flats range from R1950 to R2500 per student, per month for 10 months of the year.

A higher education ministerial report on student accommodation has called on universities to enter into partnerships with the private sector to address the current shortages in metropolitan areas. Developers and investors are doing exactly that.
The report says there is definitely a gap in the market for safe, secure and affordable student accommodation close to university campuses and other academic precincts.

Author: Kentse Radebe  -  Moneyweb.co.za

14 January 2013 12:43

The pitfalls of private student accommodation

Catering for the lower end of the market presents significant challenges.

JOHANNESBURG – The increase in the demand for student accommodation has been beneficial for private property investors, particularly as the majority of students in private accommodation are funded through the National Student Financial Aid Scheme (Nsfas), administered by universities. However, Marius Minne, CEO of South Point properties, one of the largest private accommodation providers, argues that the funds are neither enough nor consistent.

South Point caters to over 90% of students who are on Nsfas.
Providing decent accommodation at an average price of R2 500 a month with rising maintenance costs for the lower end of the income earning segment of the market is nearing the impossible. In 2012 Wits University had 950 students who were on Nsfas and living in private accommodation. Wits allocated R19 000 a year per student towards private accommodation. At the University of Cape Town (UCT), 535 students were on Nsfas in 2012. The Nsfas allocation at UCT amounted to R11 400 per student but was topped up by UCT to R20 400. Both universities have existing relationships with private accommodation companies such as South Point and Aengus Properites, among others. As such, students must choose from accommodation offered by these companies or funding will not be provided.

The Nsfas allocation is falling short by about R4 600 and R6 000 a month. At the Durban University of Technology, students on Nsfas living in private accommodation are not funded, as the university has no control over accommodation. The shortfall is left for students to cover; according to the Ministerial handbook student’s personal accommodation debt stood at R85m in 2010.
Which leaves property companies in a conundrum.

The rising cost of maintenance is placing South Point’s profit margin under immense pressure says Minnie. The conflict for South Point currently is providing adequate housing for poor students whilst the demand for student accommodation continues to rise and push up prices. As accommodation costs rise, poorer students will increasingly find themselves in tough competition with those who can afford to pay for the cost of accommodation.

Pieter Bezuidenhout, a consultant at Seeff properties, estimates that student accommodation prices in Pretoria’s Hatfield can range from R2 800 to R4 500 per month. The reason behind the rising price increases, Bezuidenhout argues, is because prime space held by property companies catering to students is in high demand. Young working people are also competing for this accommodation because of its easy access to Gautrain routes.

South Point’s largest presence is in the Braamfontein student hub which provides quick access to transport services such as the Rea Via Bus Rapid Transit System, the Gautrain bus routes and taxi ranks within walking distances. The potential for catering to young working people is also growing says Minnie, but South Point currently only has one building catering for young working adults. The Department of Higher Education’s Review of Accommodation Handbook in 2012 revealed that the University of Johannesburg, Wits and UCT have limited land for development and that private public partnerships would be the only solution.

According to the ministerial handbook review the majority of student growth in the future is expected to come from poorer students. Private student accommodation property companies like South Point are one of the few that provides affordable housing for students. Universities alone cannot meet the rising demand for student accommodation. Robert Sherman, head of campus housing and residence at Wits University, expressed a similar view when he stated that Wits aims to cater for only 35% of its student populace.
Students who cannot keep up with costs will be forced to live further away from universities, depend on other transport means to get onto campus or seek alternative income to pay for the shortfall, Bezuidenhout said. Minnie argues that because of the important role that private accommodation plays, special dispensation needs to be considered for the sector because universities alone cannot provide accommodation for all its students.

A welcome support to SA's vulnerable students

A new insurance product launched to South Africa's 800,000 registered students aims to specifically tackle the everyday vulnerabilities that can halt a learner's studies in their tracks. 


Given the typical risks and exposure to crime that is associated with life on campus and within shared student accomodation, the affordable cover (unmatched at R99 per month) seeks to fill a gap left by other insurers in covering critical items such as cell phones, laptops, and assisting with covering student fees lost that cannot be covered in the event of death of a sponsor, bursar or parent.

Currently a great number of students are on the government financial aid scheme, NSFAS, and have limited recourse in case of theft of their communication devices, placing their studies at risk at an all-important time in their lives.

In conducted national focus groups, these were regarded as the most valuable and vital goods for successful learning.
In addition to this, a distinct need for value added products such as medical, legal, tenant and personal liability was identified by the student tenants, as well as the landlords that accommodate them.

While the policy is specifically aimed at the uninsured or underinsured student market, accommodated in on- or off-campus, shared or private accommodation, the product also can also cover the university or academic institution, and the landlord, while a sponsor receives cover should the student die or be permanently injured - vital if the student has a student loan.

Landlords can for the first time mitigate their risk without affecting their no-claim bonus or claims ratios. They can add value to their accommodation by offering the insurance as an addition to the lease agreement.
Says Firststay Insurance Brokers Chairman Caj van Zyl, "Our aim with 4sho was to create an insurance policy that was priced below R100 per month and that covered the basic perils and needs associated with the student accommodation market."
"Typically this market is price sensitive and relevant insurance product options are non-existent. Value for money is at the top of the priority list."
"With the rapidly growing student accommodation market and its associated risks, the need for a product such as 4sho has become more important than ever."
He adds, "Landlords also require a product to mitigate the risks associated with housing students. We have always been concerned with having to potentially deal with medical emergencies or trauma suffered by our tenants on our properties."

"They can now offer tenants a 24hour call centre that will deal with any medical emergency over the phone and if deemed necessary the operator will dispatch emergency medical services."
"Should we have a robbery on the property a tenant's most valuable belongings are insured."
"Should they have a problem tenant that has caused serious damage to our property, landlords are covered up to R100,000 under the tenant liability clause. This is all highly relevant in this country."

The 4sho policy is available for purchase online at www.firststay.co.za or through leading student accommodation rental and management agencies nationally. Our call centre can be contacted for any advice or queries 0860 103 103.

More on demand for student accommodation spikes in South Africa

By SA Commercial Prop News 13/06/2012 12:15:00  

Dire shortage of student accommodation demand creating excellent investment opportunities in SA.

 

As the student population increases, demand also rises for student housing which so far is experiencing a critical shortage, creating excellent investment opportunities in South Africa.

Universities throughout the country are faced with an ever-increasing problem as their students struggle to find suitable accommodation and many institutions have now reached student accommodation crisis levels.
Students come from all over the country to attend universities in the main centres and in Gauteng in particular, students are faced with a chronic shortage of safe, secure and affordable accommodation.

Academic institutions have identified the problem as being one of great concern. Appeals for assistance to the Department of Higher Education, citing the effect of inappropriate or no accommodation near educational institutions on academic performance, resulted in various research projects that clearly indicated that many students are forced to live in appalling conditions.  They are often far away from their universities, whilst many others tolerate unsafe, overcrowded, unhygienic accommodation which is not conducive to studying.
In addition, it was clear that there was a fair amount of exploitation taking place where students were over-charged for living in bad or slum conditions with corrupt landlords taking their rentals, then disappearing, leaving students without basic amenities. Disadvantaged students in particular are finding that monthly rental costs are using up the bulk of their monthly budgets.

In 2009, the Department of Higher Education confirmed that the shortage was chronic and that the lack of supply of student housing was one of the primary causes for poor performance and the high dropout rates at some universities.

Despite the increased allocations towards upgrading and new residences at some universities, rising maintenance costs, ageing residences and other problems have limited the growth options for on campus student housing.  Many universities simply do not have sufficient space. Some universities have resorted to outsourcing their accommodation needs to private developers and building managers.

With university budgets facing major constraints and cutbacks from national government, many have prioritised academic and teaching facilities ahead of upgrading or building new university residences.
According to statistics from the Department of Higher Education, out of a student population of 530 000, there is currently only enough student accommodation for 100 000 students – this barely meets 18 percent of the demand.

Thus, as the demand for student accommodation far outweighs the supply, there are excellent investment opportunities available in this market.  Although the buy-to-let market is currently depressed, student accommodation is one section of this market that is proving to be an excellent buy-to-let option, usually for a relatively small capital outlay.

A number of visionary property developers are rejuvenating city centres across the country by turning old office blocks into modern one-bedroom or studio apartments for rental to university students.  Buildings are within walking distance of the universities and are safe, clean, well controlled in terms of management, noise and respect for property, and they provide excellent accommodation for students at a reasonable price. On average, in the Braamfontein area, a small studio or one-bedroom flat costs a rental of just R2 500 per month.

Private investors are also buying properties near the universities, particularly near UJ, Wits and Tukkies. They are buying these either for their own children while they study at university or to let to other students. Parents who buy to accommodate their children during their studies have found that appreciation is excellent, often selling the properties at almost double the price they paid for them (dependent on the number of years they owned the property).

Many students prefer to reside off-campus or in sectional title units with more privacy than the residences. In recent years, astute parents have realized that rather than merely paying rent for their children’s accommodation, they can invest in an asset that can yield good rental returns given the current ongoing demand.

Braamfontein, near Johannesburg’s inner city, is rapidly emerging as a vibrant growth node and is experiencing an overall surge in the demand for property. This trend towards revitalisation comes on the back of demand and supply of student accommodation.  It has been and is still being driven by the enormous ongoing demand for accommodation from students attending Wits University and the University of Johannesburg as well as other educational institutions in the area such as Damelin and Lyceum College.
“The demand for properties suitable for student accommodation in the nearby Westdene, Melville and Auckland Park areas is also high, with particular emphasis on the Sectional Title sector. Properties purchased which are suitable for this kind of usage are showing a higher than average return on investment plus higher capital returns for the investor,” says Pat Evans sales manager at Seeff Randburg.

Although the rate of new development has slowed dramatically in most parts of the country on the back of the economic downturn, Hatfield in Pretoria remains relatively busy in terms of residential and corporate property activity. This has been partially driven by the ceaseless demand for student accommodation and partly by the area’s popularity as amongst international embassies and trade missions. Hatfield's growth has also been boosted by its proximity to a Gautrain station. Here too, a trend has developed whereby old buildings are being demolished or renovated and replaced with blocks of flats or offices. The buy-to-let to student apartments are proving to be excellent investments.

Due to the rapid expansion of the University of Pretoria and the acute shortage of vacant land for student housing development in the Hatfield precinct there has been of late, a marked increase in the demand for student accommodation near or around the University,” says Pieter Bezuidenhout, property consultant, Seeff Pretoria East.

“With most of the old houses in the Arcadia and Hatfield already converted into student communes and with the present new developments targeting student rental accommodation only coming onto stream later in the year or next year the shortage for student accommodation has become dire. The situation has been further aggravated by the fact that the development of Hatfield as Pretoria’s new CBD and the opening of the Hatfield Gautrain station have led to young professionals competing with the students for sectional title units either to rent or to purchase. As a result, residential property prices and rentals in Hatfield remain high and will do so in the future, if compared to the rest of Pretoria.  As a result both purchase and rental prices in the Hatfield area are predicted to increase even further in future.”

Blade Nzimande on student housing at universities

29 Feb 2012

It is my pleasure and privilege to release the much anticipated report of the Committee for the Review of the Provision of Student Housing in South African Universities.

Ladies and Gentlemen of the media, after my appointment as Minister of Higher Education and Training in 2009, I visited a number of institutions as part of my orientation with the portfolio. During these visits it was glaringly apparent that student housing is a major problem in our public university system and that something needed to be done urgently. The conditions of some of the student residences both off and on-campus left much to be desired and this can in part explain why there has been so much unhappiness related to accommodation in many campuses.

Further exacerbating the problem has been a lack of supply of adequate and affordable student housing offered by universities, which in turn forced students to rent sub-standard accommodation off campus. In some cases the living conditions, both on and off campus, were not conducive for academic studying, thus having a detrimental impact on the success and throughput rates of students at universities.

The lack of sufficient and adequate on-campus housing has resulted in overcrowding, thereby jeopardising students' academic endeavours and creating significant health and safety risks for them.

From 2005 to 2010, universities reported a total of 39 incidents of student housing-related protests of varying intensity and scope, several of which were sparked by dissatisfaction with residence maintenance and facilities. Most of the protests were in historically black institutions. There were similar protests in 2011 and also in recent weeks there have been a handful of student protests linked to the desire for affordable and academically conducive student residences.

In 2010 I appointed Professor Ihron Rensburg, the Vice Chancellor of the University of Johannesburg to lead a committee whose purpose was to assess the current provision of student accommodation, and benchmark the South African universities against each other as well as against international institutions operating in a similar environment. Furthermore, the Committee had to determine the real need and assess the various models of provision of student housing, the various types of housing that can be provided and the potential funding models which may assist in alleviating the problem.

The Committee was further required to ensure that the provision thereof does not in turn detrimentally affect the operating budgets of the universities in future.

Prof Rensburg completed this task in September 2011 and presented a report to the Ministry. I am only releasing the report now because it would not have benefitted the universities to merely state the obvious and present the report without the Ministry coming up with a plan of action about how the challenges in the report would be addressed. As a result, I will also share with you how the Ministry aims to address the key challenges identified in the report.

The report does indeed confirm that there are major backlogs in the provision of student accommodation, and that in some instances students are living in appalling conditions. Many of the institutions have not been able to make sufficient investments in maintaining their infrastructure, and far too few students can actually be accommodated.

It is clear that massive investments are required to address the backlog that currently exists. Student enrolment in the residential university system for 2010 was 535 433 and is expected to grow at a rate of over 2% (our academic enrolment target for the cycle 2011 to 2013 suggests an average growth of 2, 8%).

The number of beds available at residential universities in 2010 totalled 107 598, or 20% of the total contact student enrolment. This means that 80% of contact students in 2010 could not be accommodated in the residences owned by our public universities. By way of example, it takes a student that resides at home in Mamelodi and travels to and from either the University of the Witwatersrand or the University of Johannesburg, between 3-4 hours a day to attend classes using public transport.

The estimated distance between Mamelodi and Johannesburg is only 82 kilometres apart. It's no coincidence that many students experiencing these conditions, especially at first year, fail to cope with the demands of academia given the time spent commuting. While it is clear that every student cannot be accommodated at university residences, research evidence suggests that being housed in a safe, well-managed residence does advantage students, particularly those from poorer backgrounds as they do not have to spend hours commuting to and from the university. Affordable student accommodation allows these students to focus their energy on their academic endeavours, thereby improving their chances of success.

Nationally, the racial demographic profile of students provided with accommodation in universities is close to that of the national demographic profile of the country. As might be expected, there are more female than male students accommodated (55% of females are accommodated in student residences). Most disconcerting though is that only 5.3% of first year students, those arguably in greatest need of accommodation, are in residences.

The department will be encouraging universities to ensure that preference is given to first year students so that they can be supported in their academic endeavours. It is easier to develop special programmes for academic support when you know where students reside.

Of particular concern also is the severe shortage of accommodation for students with disabilities, as well as the big differences in what facilities are provided at different institutions. Some campuses have no residences suitable for students who require wheelchair accessible buildings, rooms and bathroom facilities.

Even more disturbing was the discovery that many students at our institutions actually go hungry.  Only 41% of campuses have dining halls, of which 40% are self-catering and 19% have both options. The Committee found that some students go for days without a meal, and sadly, this was found to be a particularly serious problem among first year students, including even those with bursaries.

I am deeply concerned about this state of affairs. Students need to have access to, and funding for, proper meals. Hunger and poor nutrition are believed to affect attendance, concentration levels during lectures and ultimately, academic performance which in turn leads to high drop-out rates. Hungry students cannot be expected to fare well academically.

I want to appeal to all Vice-Chancellors to ensure that students in their residences have access to, and funding for, proper meals. For those who prefer to prepare their own food, then residences should have proper kitchenettes. The proposed minimum standards in the report provide guidelines on proper meals and catering facilities to ensure that students eat properly.

Current provisioning and condition of Student Housing
There are at least 554 student residences/ housing complexes, including 93 dining hall facilities, serving the 49 campuses of the 22 universities. A quarter of all residential infrastructure at universities is unsatisfactory or in poor condition. Students in some residences are using bathrooms as kitchens, since there are no kitchen facilities. Around a quarter of all infrastructure, fixtures, fittings and dining hall facilities are assessed by the universities concerned to be in an unsatisfactory or poor condition.

The value of the current national maintenance and refurbishment backlog is R2.5 billion. Furthermore, if the existing residence stock is to be modernised to render the residences ‘fit-for-purpose', then a further R1.9 billion is required. This means that only taking care of the current backlog without adding any new infrastructure will require R4.4 billion as at September 2011.

Backlogs in the system and cost to address the backlog
The average cost to build and provide a single bed is estimated at R240 000 at 2010 prices. This cost includes all the necessary standard fittings and furniture, kitchenette and social space that a student accommodation is expected to have. It should be noted that the actual cost differs considerably from one institution to the next depending on the location of the institution and whether the institution has its own land for development or not.

It is estimated that the 2010 residence bed shortage was approximately 195 815, and this grows yearly with the expansion of the system. The estimated shortage in 2013 will be 207 800 beds. These estimates are premised on the provision of residence accommodation for 80% of full time contact student enrolments on campuses where off-campus accommodation is unsuitable and/or unavailable especially in rural universities and for 50% of full time contact student enrolments on campuses where limited off-campus accommodation is both available and suitable.

The cost of overcoming this shortage over a period of ten years is estimated at R147.37 billion over fifteen years, including escalation for building and increased intake growing at an average of 2% per annum.

Role of the private sector
The private sector is a significant contributor and stakeholder in the provision of accommodation to university students in South Africa, as is the case internationally. Leaving aside those students who live at home or in their own accommodation, it is estimated that the number of student beds currently made available by both small and large scale private providers in South Africa is close to 10% of the total full-time contact enrolment at universities in 2010.

However, the study indicates that the provision of private student accommodation is unregulated in South Africa, allowing widespread exploitation of students and exposure of students to various types and levels of risk. As a result, we also need to be very careful about the role of the private sector as it does come with risks of exploitation, especially if left unregulated.

Recommendations
The report makes key recommendations in eight areas:

• residence admissions and allocations policy
• minimum standards for student housing and accommodation
• private student housing and accommodation
• residence management and administration
• role of residences in the academic project
• financing of student housing and funding of student accommodation
• condition of residence infrastructure
• future planning.

My department has engaged deeply with this report. An immediate response to begin addressing the infrastructure backlogs has been implemented: An amount of R3.8 billion has been allocated as an infrastructure and efficiency grant for universities over the next two financial years (2012/13 - 2013/14). Out of this, R847 million has been exclusively earmarked for Student Housing (R743 million of this for historically disadvantaged institutions).

However, this amount is not enough to address the backlogs in the system. To augment the funding above, the department is currently in discussions with the Public Investment Corporation (PIC) about setting up a special fund for university accommodation. It is anticipated that the fund will be operational in the next 3-4 months and will offer preferential rates to universities. However, institutions do not have to wait for the legal establishment of the fund, but can start applying immediately for student housing loans.

The department is also planning a workshop with all universities to work through the recommendations of the report and to specifically take forward the guidelines on minimum standards for student accommodation and finalise these for implementation across the system.

We urge universities to engage with the report and start implementing the recommendations at the institutional level while national policies and guidelines are being finalised.

Let me take this opportunity to thank Professor Rensburg and the team that supported him for the excellent report which will assist the Ministry and the Department in addressing the housing needs of students at our institutions through different interventions and initiatives.
Issued by the Department of Higher Education and Training, February 29 2012

SA investros cash in on student homes

SA investors cash in on student homes

Property 24

17 Jan 2012


A shortage of student accommodation at universities and tertiary institutions has seen old office blocks being turned into upmarket student homes.

Johannesburg has seven properties located right across the road from the University of Witwatersrand and will take 934 students.

The shortage of student accommodation and funds to build new residences has led some universities in Johannesburg, Port Elizabeth and Durban to outsource their accommodation to private developers and building managers, says Richard Rubin, chief executive officer of Aengus Property Holdings (APH).
He says there is an ever increasing investor appetite for this type of housing and the private sector is in an ideal position to step into the breach.
APH is known for its inner-city regeneration projects, urban renewal and a new wave of fashionable inner-city living.
The developer is one of the leaders of affordable yet upmarket accommodation within the city centres across the country converting old office blocks into upmarket accommodation for university students.
Rubin says according to the Department of Higher Education statistics, out of a student population of 530 000, there is currently only enough student accommodation for 100 000 students, meeting just 18 percent of the demand.
The department says the lack of supply of student housing is the primary cause for poor performance and high dropout rates at some universities, with students forced to live in conditions not conducive to studying, he says. 
“Accommodation costs are also pushing university out of the reach of many disadvantaged students as rent eats up a major proportion of their monthly budgets.”
After piloting their successful student accommodation model in Johannesburg with 10 buildings, APH has purchased and converted 11 additional buildings in Johannesburg, Durban and Port Elizabeth into high quality student apartments.
He says a number of transactions spanning Johannesburg, KwaZulu-Natal and the Eastern Cape have been concluded adding that student accommodation is breathing new life into South African city centres.
Rubin explains that from the 11 properties, three are in Greyville Durban and will accommodate 183 students.
Central Port Elizabeth has six properties and will accommodate 482 students and Johannesburg has seven properties located right across the road from the University of Witwatersrand and will take 934 students.
Rentals in these types of properties range from R1 950 to R2 500 per person depending on the offering.
In Braamfontein Johannesburg, Aengus is already offering 1 000 new beds for 2012, he says.
Rubin says this is a growth market based on Higher Education Minister Blade Nzimande’s plans for growth to tertiary catered students.
He says if there were investments for sale (none of the students units in the Aengus Investment Properties buildings are currently for sale), investors need to make sure they are well run and located close to tertiary institutions.
Jaco Rademeyer of Jaco Rademeyer Estates says their main student accommodation is in the Summerstrand area in Port Elizabeth close to the Nelson Mandela Metropolitan University.

The developer is one of the leaders of affordable yet upmarket accommodation within the city centres across the country converting old office blocks into upmarket accommodation for university students.

Rademeyer says savvy investors buy property in this area close to the university and rent out per room with rooms costing up to R2 000 per month.
An investor in this case then earns income of R6 000 on a three bedroom property whereas a normal rate would have been about R4 500 per month.
He says people create extra rooms from garage spaces to earn more income.
Furthermore, he says January and February are generally busy months when it comes to student accommodation with many students opting to share a house, townhouse or flats and mostly looking for furnished accommodation.
The average price range that students are looking to pay this year is between R1 800 to R2 500 per student per room.
With the majority of students using public transport, the popular locations are Humewood and Summerstrand.
He says Humewood has mostly flats and students share these while Summerstrand has mostly townhouses and a variety of garden cottages.
“Student accommodation is very popular and there are plans of doing a whole student village very close to the university at the moment.”
Durban North is currently experiencing a fairly good demand for student accommodation because of Varsity College and Sharks Academy in the area.
According to Grant Gavin, broker/owner of RE/MAX Panache, student accommodation on offer varies from a converted house often with out-houses converted on the property to granny flats on existing properties to luxury homes booked up a few years in advance.
Closer to Durban, around the Durban University of Technology, there are large blocks of flats such as Bryanston Heights where two and three bedroom flats are being used as student digs.
Quite often the lounge is converted into an extra bedroom and the cost per bed is kept down, he says.
Asked about rentals, he says as an example, in Bryanston Heights, students can double up in a room from R900 per month and for own room upwards the cost is R1 200 per month.

Rentals charged on modern, well finished apartments in prime locations range from R3 300 for a one bedroom flat, according to Engel & V?lkers Potchefstroom

In Durban North, the bottom end accommodation costs around R1 500 per bed per month, granny flats between R3 500 to R4 000 and luxury accommodation often inclusive of meals (although limited) to R3 000 per bed.
“For a residential property owner looking at additional income streams from their property, this does provide a good option.”
We are seeing more investors buying a property with the specific intention of converting the house and outbuildings for student accommodation and the property then becomes a cash positive investment – something you very rarely attain on a normal residential property, says Gavin.
He says investors of this type of housing should have somebody living on-site to manage/supervise what goes on at the accommodation.
Students enjoy the good life and it is therefore important that the landlord takes responsibility to ensure that there are strict rules in place for noise levels and unruly behaviour, particularly given that these properties are located in residential areas.
It’s probably also advisable to contact somebody at the council to ensure that the number of students living at the property is approved correctly, he says.
In Bloemfontein, the University of the Free State (UFS) and Central University of Technology (CUT) campuses does not have enough student accommodation.
CUT students live mainly in Willows which have over the years become predominantly a student area and many families have moved out, according to Mike Spencer, owner at Platinum Global.
He says UFS students tend to live in Brandwag, Universitas and Westdene and tend to be economically better off.
Bachelor flat accommodation has been snapped up and normal one or two bedroom flats are virtually unobtainable.
A new building was constructed outside the UFS campus and will eventually have about 370 fully furnished two person apartments at Unilofts, he says.
Spencer says the Free State Province believes that there is a shortage of about 2 000 student flats.
This year has seen a well publicised increase in the number of students and this is on top of the 1 000 extra students at each university last year.
“Rentals continue to increase at about 10 percent as they have done for some time,” he says.
At Willow Glen, bachelor pads are now priced at R2 150 from the beginning of the year and Unilofts R5 500 per month.

Rentals charged on modern, well finished apartments in prime locations range from R3 300 for a one bedroom flat and student units are 100 percent occupied and investors enjoy capital growth as new buyers and tenants come to the city annually, says Venter.

Investors in this housing sector cannot go wrong as there is demand for student accommodation.
He explains that as for the disadvantages, CUT students that mainly come from Lesotho require affordable housing and cannot afford unrealistic rentals.
“Investors have to make sure that the returns make it worth their while and need to factor in the high levies, high maintenance and vacancy factors in their pricing.”
He says Bloemfontein has no forward town planning for building student accommodation meaning there is no zoned ground.
The CUT has a major problem because it is situated in the built up city centre with limited opportunities for acquiring ground to build new hostels/blocks of flats.
He says although UFS has a similar problem, many of the students come from better off families and have their own transport, which gives more of a choice unlike CUT students.
Engel & Volkers reports an influx of investors into student housing In Potchefstroom, says Carl Venter managing director of Engel & Volkers Potchefstroom.
Venter says they are currently marketing a few well designed student housing developments in prime locations and investors from across South Africa are keen to invest in a good quality product with great returns and steady capital growth.
Developments in the area include Carmen, Ivy League, Annes Garden and Botanika.
Botanika and Anne’s Garden Two will be ready for occupation in March, Carmen at the end of 2012 and Ivy League will be completed at the end of 2013.
The agency’s property sales for 2011 revealed that 25 percent comprises student accommodation, 20 percent commercial and 55 percent residential.
“Buyers are parents buying for their children studying at the North West University and investors.”
Rentals charged on modern, well finished apartments in prime locations range from R3 300 for a one bedroom flat.
These student units are 100 percent occupied and investors enjoy capital growth as new buyers and tenants come to the city annually.
He says demand for student housing this year is peaking at a 5 year high.
In the Western Cape, Pam Golding Properties (PGP) rentals manager Dexter Leite says there are two areas that are in demand for the University of Cape Town (UCT) students and City Bowl with other student accommodation coming from Cape Technikon, AAA Advertising School and Boston City School.
They look for two bedroom apartments to share with both parents invariably signing the lease as this is generally a cheaper (and considered safer) option than a one bedroom unit for one person.
Security, safety and secure parking are paramount concerns for students and their parents with many choosing newer developments, with mixed residential and retail components which offer an appealing lifestyle.
“Demand starts in October each year, peaking in November and December with enquiries continuing through January.”
Asked about property returns, he says gross returns on average are around 5 percent, whether for student accommodation or other tenants, in similar rental categories.

Inside one of the student units provided by Aengus in Johannesburg.

He says almost all the units they let to students were not purchased specifically as student investment accommodation, but were bought as investment properties.
In the Southern Suburbs of Cape Town, rentals range from R4 500 to R5 500 per month for a one bedroom unit with one parking bay to between R8 500 to R10 000 per month for two bedrooms with two secure parking bays.
Leite says there is demand across all rental price categories in the Southern Suburbs and City Bowl areas depending on affordability and the student / parents’ specific requirements.
Overall, demand for student accommodation in these areas outweighs supply, he says.
He says the The Quadrant (Claremont), Mont Clare (Claremont), The Claremont (Claremont), Intaba (Claremont) Albion Place (Newlands) are very popular with students.
In City Bowl, bachelor apartments are priced from R4 000 to R5 000 per month and one bedroom units from R5 000 to R6 000 while two bedroom units cost between R6 500 to R8 500 per month.
Popular developments in the area include Mutual heights in Darling Street, St Georges (Strand Street), Wembley Square and Perspectives (Roland Street).
PGP Stellenbosch area manager, Louise Varga says buyers of student apartments are parents and investors.
Parents normally buy an apartment and keep it for around six years on average.
As an example, Varga says a parent who bought a 65 square metre, two bedroom unit in Andringa Steet for R825 000 in 2004.
When both the children completed their university studies six years later, the unit was sold for R1.4 million in 2010, which equates to an annual growth of 9.82 percent. 
“I believe we have this steady capital growth due to the fact that every year we have parents selling and parents buying.”

A new development on campus, Andringa Walk will make an excellent investment with rental income of R4 000 per room. These units are priced from R1.4 million to R3.350 million with an average price of R1.940 million.

Varga says in Stellenbosch, they have always had more student parents buying compared to buy-to-let investors.
On campus we currently will rent out rooms for R4 000 while a two bedroom apartment can achieve R8 000 per month and bachelor apartments at R4 500 per month, says Varga.
She says they recently sold a two bedroom unit in Merriman street for R1 750 million (54 square metres with two basement parking) with a return of 4.6 percent in the first year and this increases annually.
“On average the rental increases around 10 percent per annum and over a period of five years the recent past has proved a capital growth of 9.8 percent per annum.”
A new development on campus, Andringa Walk, will make an excellent investment with rental income of R4 000 per room.
These units are priced from R1.4 million to R3.350 million with an average price of R1.940 million.
She adds that this is an ideal buy for any parent compared to simply paying rent and getting nothing in return. – Denise Mhlanga

Fund brings additional student apartments to Jozi

International Housing Solutions (IHS), a global private equity investor in affordable housing in South Africa, is funding the refurbishment of hundreds of apartments near the University of Johannesburg and Wits University, major public transport routes and shopping centres.
Previously co-owned by IHS and Aengus Property Holdings, IHS, with its sterling asset management reputation, now holds 100% ownership of the Student Digz property portfolio following the recent approval by the Competition Commission of the sizeable transaction.
“Student Digz differs from other student developments in that it is not based on the dormitory-style model. All apartments are self-contained, which means that students have their own bathrooms, kitchens and living spaces, and most importantly, privacy and quiet to ensure successful studies,” says Rob Wesselo, managing partner at IHS.
IHS has been steadily building up a portfolio of new-generation student housing solutions in the country’s major urban centres. Contrary to the popular view that student housing is an unpleasant mix between boarding school and down-market apartments, IHS has brought a new vision to the market.
“Since we have taken over complete control of the management of the development, we have launched a massive project to ensure all maintenance was completed and apartments refurbished where necessary. Lots of time, money and human resources have been poured into ensuring students have great living and studying space for the 2012 intake,” says Wesselo.
“The result is modern, clean and inviting apartments where students won’t only live, but be able to enjoy a satisfying lifestyle.”
Wesselo says that as the year draws to a close, students who will be studying in Joburg in 2012 should ensure they have accommodation lined before they put up their feet and enjoy the December holidays.
“There is a significant shortage in quality, affordable student rental accommodation in Joburg, and leaving these arrangements for the New Year may result in students being forced to stay far away from their tertiary institutions or having to settle for sub-standard accommodation,” says Wesselo.
He says there are close to 1 900 accommodation opportunities available, with rentals starting at R1 800; a new letting office has been opened in Braamfontein, and prospective students can visit the office, or contact letting agent Mafadi for enquiries.

Student Insurance Policy - A South African First

Student Insurance Policy (Launching February 2012)

Firststay Insurance Brokers, in collaboration with Santam Insurance and Let and Stay Student accommodation agency, have through extensive research and experience crafted a South African first, an affordable and relevant student insurance policy.

This policy, priced at R100 per month, will now offer the student staying in a shared accommodation environment, basic cover for a range of items as well as additional benefits. Benefits include;



Students and their parents are often financially and emotionally paralysed by theft or injury, severely affecting their ability to continue their studies successfully. This policy should mitigate this risk and allow them to focus on their studies.

The policy will be launching in February 2012 through relevant student accommodation and letting agents nationally. Agents that would be interested to offer this policy to their tenants can contact Ryno Diedericks at ryno@firststay.co.za or 082 928 0170

The policy is underwritten by Santam and all claims will be administered by the Santam call centre. For more information on the policy please visit www.firststay.co.za

Dept to help pay for 25 000 students waiting to graduate

Compiled by the Government Communication and Information System
Date: 26 May 2011
Title: Dept to help pay for 25 000 students waiting to graduate
--------------------

Cape Town - The Department of Higher Education and Training is coming to the rescue of about 25 000 students from universities who have completed studies but are not able to graduate and get jobs because they have not finished paying student loans.

Briefing the media before his Budget Vote in Parliament today, the Minister of Higher Education and Training, Blade Nzimande, said his department would set aside about R200 million to help students who had taken out loans and had since graduated, but still owed monies to the National Student Financial Aid Scheme (NSFAS).

Those who meet the requirements to graduate between 2000 and 2010, and who are eligible for NSFAS loans can apply for this special funding through their respective student financial-aid offices, he said.

Nzimande, who also made several other announcements on the NSFAS, said the new measure would apply to students that registered for loans from April 1.

These included a doubling of disbursements under the fund - from R2.7 billion in the 2010/11 financial year to R5.4 billion this financial year - and placing a limit on interest charged on student loans, so that students no longer have to pay the interest on their loans until 12 months after their graduation.

At present, interest charged on loans kicks in the moment you sign for a loan, unlike in Brazil and Canada, where interest payments on student loans only become payable after a student graduates.

Added to this, R50 million has been provided for post-graduate students who require financial assistance to complete their degrees.

These students will enter into loan agreements with the NSFAS and the money they pay back would be earmarked to fund post-graduate students, Nzimande, said.

But Nzimande hastened to add that this wasn't a license for other students to not pay back their NSFAS loans.

He said the department would approach SARS to assist in tracing and forcing those NSFAS loan beneficiaries, who are now working but are not paying back loans, to pay back their loans.

The department is also looking to increase the number of university accommodation available to students.

Currently only 18.5 percent of students stay in university accommodation and the department had set aside R686 million for the years between 2010 and 2012, to build and refurbish student residences, he said.

Nzimande said preliminary reports were being studied by the department on setting up universities in the Northern Cape and Mpumalanga, while work is also under way to increase the number of universities that offer courses for teachers that want to teach in African languages.

The department was also busy overhauling Further Education and Training (FET) colleges and department officials had already visited all 50 FET colleges to assess how to give hands-on support.

The minister said the career advice services programme, run by the South African Qualifications Authority (Saqa), was launched in January this year and a website was now up and running - www.careerhelp.org.za, as well as a Facebook group - www.facebook.com/careerhelp.

The department is partnering with the SABC, which is running 30-minute career guidance slots on nine radio stations, reaching about 2.3 million listeners per week.

The programme is broadcast in nine African languages and Nzimande said the department intended expanding the radio programme to Afrikaans as well.

Turning to the transformation of the Skills Education and Training Authorities (Setas), Nzimande said the department was strengthening Seta governance and had reduced the number of Setas from 23 to 21.

He said the department is tackling underspending at Setas and has told boards to reduce the trend.

Setas would be reconfigured to spend more on long-term workplace-orientated training.

The department would also be setting up a task team to analyse where Setas spend money and how much use Setas make of public learning bodies, rather than just private consultants.

Commenting about media reports on the appointment of ANC secretary general Gwede Mantashe's wife Nolwande as a member of the new Services Seta's board, Nzimande said Mrs Mantashe is a human-resource expert and should be seen on her own merits as a professional, rather than be judged on who she is married to.

Nzimande said the Green Paper on Higher Education would be released later this year.

The appointment of a new director general is in process and the department would begin interviewing candidates soon, he said.





Reported by: South African Government News Service

Business unusual at Public Works

Compiled by the Government Communication and Information System
Date: 02 Jun 2011
Title: Business unusual at Public Works
--------------------

Pretoria - The Department of Public Works is set to embark on an ambitious programme that will see it invest in repairs and maintenance of government buildings, which will result in huge savings for the state.

The programme, announced by Public Works Minister Gwen Mahlangu-Nkabinde on Wednesday during her inaugural Budget Vote in Parliament, will be undertaken by the department in three years.

"Investment in repair and maintenance, continuous maintenance and construction of new government buildings could generate major savings for the state ... This will also include ensuring the relocation of national departments to state owned buildings where it is feasible to do so," said Mahlangu.

She noted that the leasing portfolio was costing the state a lot of money, where in the past year alone, her department spent billions in leases and functional accommodation for client departments.

"We acknowledge that our lease portfolio will take a while to reduce but in the interim, the department will continue to find ways to structure its current leases such that the socio-economic goals of government are realised including black, women and youth economic empowerment," said the minister.

Mahlangu said the department would invoke the National Infrastructure Maintenance Strategy and the National Contractor Development Programme to target investment in this sector, a move that would also benefit small and emerging contractors.

With regards to the rehabilitation of unused as well as underutilised public buildings, the department will in collaboration with the Department of Higher Education, convert these buildings to provide affordable student accommodation where it is possible.

The upgrading and refurbishment of the HG De Witt building in Tshwane will result in accommodation for approximately 180 students, while the upgrading and refurbishment of Pelonomi Hospital in Bloemfontein will result in accommodation for about 700 students.

"Through this intervention, the department is looking at alleviating the problem of lack of decent student accommodation while creating job opportunities," explained the minister.

The department will also rehabilitate selected military bases, while it is also paying attention to the deteriorating state of the infrastructure at harbours, starting in Cape Town.

Turning the focus to accommodation needs of the South African Police Service, Mahlangu said in the year under review, these will be extensive given the need to fast-track the goal of creating "a safe and secure South African society."

She said infrastructure projects were solid proof of government's commitment to service delivery.

"Furthermore, and with respect to the SAPS portfolio, I wish to announce that in the current financial year, the department will complete the first ever state-of-the-art Forensic Laboratory for SAPS in Cape Town," said the minister.

The department will also launch a campaign to encourage South Africans to reclaim lost or missing immovable assets.

"We will soon launch the Amnesty Campaign aptly named 'Operation Bring Back' in order to encourage South Africans to reclaim lost and/or missing immovable assets. These properties, we believe, were insincerely wrested from the state in the turbulent transitional period following the demise of apartheid and were being unlawfully occupied.

"The significance of the state-owned real estate as a major revenue generator for government cannot be over-emphasised," said Mahlangu.

She said once recovered, the properties will either enhance the department's disposal programme or contribute positively to the Inner City Regeneration programme in revitalising the economy.


Reported by: South African Government News Service

Task team to review student accommodation challenge

Eyewitness News

Government admitted that student accommodation is a major challenge as more and more students leave their home towns to further their education.

Education officials briefed Parliament’s Higher Education and Training Portfolio Committee on the issue on Tuesday.

It said it needs R5 billion over the next three years to improve infrastructure at universities.

Acting Deputy Director-General of Universities Kirti Menon, said about 800,000 students need accommodation and some university towns are feeling the pressure.

“This is particularly evident in the cities like Johannesburg or Pretoria or Cape Town,” she said.

Menon said this is a problem faced by both developing and developed countries.

She added that a task team has been set up to review the issue and study international practices.

(Edited by Lindiwe Mlandu)

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.