Savvy property investors should snap up student accommodation on auction

Since the beginning of 2023, students looking for a home away from home during their tertiary studies have faced more bad news than good: there is simply not enough accommodation to meet the demand.

In January, minister of higher education Blade Nzimande pegged the shortage of student accommodation at public tertiary institutions at over 400,000 beds. “This exposes students to immense vulnerabilities, such as serious crimes and gender-based violence. Some students stay in facilities that are not conducive to performance in their academic work,” he said in a statement.

The “significant demand for affordable, safe student housing, close to tertiary institutions, transport and entertainment” presents a good investment opportunity for savvy real estate investors, says Ari Ben, CEO of AuctionInc, a leading auction house specialising in property. 

“Those looking for a market-related, recessionproof return on capital will do well to consider buying such properties on auction.”

According to the AuctionInc website, the advantages of purchasing a property at auction include:

• Reassurance that the seller is serious about selling. Often when transacting via traditional methods, sellers are sometimes merely testing the waters, which can cause untold frustration to prospective purchasers.
• Sellers are often extremely motivated, which may result in an opportunity to acquire a property at a lower price.
• Before placing a property on auction, thorough due diligence is done, ensuring prospective purchasers know exactly what they are buying.

What type of properties are most in demand?

In 2020, the International Finance Corp’s report on the student housing landscape in SA estimated a shortage of about 500,000 beds for the 1.19-million post-school education students enrolled at university and vocational training schools nationwide. That number is projected to reach almost 800,000 by 2025, with enrolments set to grow to nearly 1.6-million.

According to the report, the highest demand for purpose-built student accommodation lies within the affordable segment, especially for students funded through the government’s National Student Financial Aid Scheme (NSFAS).

“We have seen some robust bidding on the floor for well-run student accommodation facilities. AuctionInc recently sold NSFAS-accredited accommodation to the value of R20m on auction,” confirms Ben.

Beyond affordability, those looking to invest in student accommodation should keep in mind that potential tenants (and the parents who may be funding them) prize security and easy access to facilities such as on-site gyms, coffee shops, fast internet and public transport.

Hot properties on auction 

Two properties developed as student accommodation are scheduled to go under the hammer as part of AuctionInc's multi-property auction on August 24.

The first is NSFAS-accredited building on a prime site in central Rustenburg. Located on Nelson Mandela Drive, this recently renovated property is well-managed and maintained and close to multiple university and college campuses. 

It offers 148 rooms for 189 students with retail outlets at ground level. The student accommodation is configured with single, double and triple bed layouts, private and communal bathrooms, kitchens, a gym, a study area, a braai area, communal TV areas and laundry rooms.

The second is seven-floor building located 1km from the Durban University of Technology (DUT) in the Durban CBD. It currently operates as a residence servicing DUT and generates an annual income of more than R4.6m. It has been let directly to the university for another two years.

The well-maintained property boasts numerous features including biometric access control, CCTV cameras, communal study, kitchen and entertainment areas and laundry facilities on each floor. Each of the 45 rooms is equipped with a fridge, private ablution facilities and a shower. It also has a ground-floor retail component.

For more information, visit the AuctionInc website.

This article is adapted from one was originally published on Everything Property, the online home of the Business Day HomeFront and Sunday Times Neighbourhood magazines. Visit Everythingproperty.co.za for updates on the latest property news.

This article was sponsored by AuctionInc.