Like any asset class, the South African property sector is subject to cyclical ups and downs. While these movements typically lag the broader economy by a number of months, the fortunes of property, in general, are usually closely tied to the state of the country’s economy, notes financial services firm FNB.
However, Ndlovu pointed out that not all student accommodation is created equal, with some fairly significant differences in how investors and developers should approach the sector depending on the type and location of the universities their accommodation services. “NSFAS has not only made it possible for more young South Africans to attend university,” he said, “but the built-in rental subsidies included in most NSFAS funding means that prospective students can afford to access accommodation close to their chosen university campus, which was one of the main challenges many faced prior to NSFAS support.”
“However, the demand from privately funded students for accommodation closer to universities will likely pick up again with new student intakes in the future – which creates an even more compelling argument in favour of investment and development in this sector.” He said that the successful student accommodation developer or investor will be those who find a way of balancing these often costly student needs with the affordability expectations that many of these students still have.