The dearth of quality, affordable student housing close to places of higher learning is driving a significant wave of investment in this niche accommodation sector.
International Housing Solutions, the leading global equity investor in affordable housing, says a significant percentage of its second fund will be dedicated to ensuring an increased supply of student housing units in coming years, and expects that its strategy will deliver superior returns in excess of 20%. IHS recently launched its second fund, IHS Fund II, in the wake of the massive success of its first fund, the SA Workforce Housing Fund, which enabled the large-scale development of affordable housing in South Africa.
Now, as students get ready to head to places of higher learning next year, thousands of them will realise that securing a coveted space at a tertiary campus is just the first hurdle, and that finding a place to live and learn is likely to throw up some serious challenges of their own in coming months.
According to the Department of Higher Education’s Ministerial Review of SA University accommodation, less than 10% of first-year students can be accommodated. However, much of the available on-campus accommodation remains dilapidated, unhygienic and unsafe. The latest statistics further show a shortfall of 207 800 university beds, and that does not include the shortfall of accommodation for private tertiary institutions. 400 000 students are currently enrolled at FET colleges, the vast majority of which do not have any on-campus accommodation.
“The lack of adequate and affordable student housing results in students renting inadequate accommodation off-campus, in locations that are often in appalling condition and overcrowded,” says IHS Managing Partner Rob Wesselo.
“Of great concern, is the fact that the poor living conditions of students have been linked to our country’s high drop-out and failure rate, due to these conditions not being conducive to studying and good health,” says Wesselo.
And he says that, as government funding for studies through the NSFAS (National Student Financial Aid Scheme) drives the growth in the student population, the demand for accommodation increases dramatically.*
Wesselo says that due to the huge demand and limited supply of student housing opportunities, IHS will dedicate a significant part of its second fund, IHS Fund II, to service this need in the market.
“Through our first fund, the SA Workforce Housing Fund, we have already made available 2184 opportunities in quality student developments,” he says.
“And in line with our philosophy to create not mere walls for shelter, but to build thriving new communities, our student housing is characterised by their pleasing aesthetics, holistic services including safety interventions, gyms, study areas, cafeterias and shuttle services, as well as sports teams and student representative bodies.”
Although student housing offers excellent investment opportunities, it must however be approached via a sound strategy to mitigate any sector-specific challenges, says Wesselo.
“We have therefore invested in a strong internal team of specialists who, together with our property management partners, are experts in student housing financing, delivery and management.
“There is an urgent need for student accommodation at both Universities and FET colleges throughout the country, and we are pleased that, through IHS’s national coverage and existing capacity, we are in a unique position to deliver and address this challenge nationally,” Wesselo says.
“We have been building a pipeline that will be focused on the provision of quality accommodation opportunities for both private and public higher education institutions, and will target the delivery of at least 5000 student housing opportunities in Fund II.”
THE IMPORTANCE OF MAKING PRIVATE RESIDENCES A REAL HOME FOR STUDENTS
Many students seeking out accommodation come from very disadvantaged backgrounds, but they are however able to access quality off-campus residences with the help of NSFAS funding. The staff at these residences then have the responsibility of educating students in areas of life management such as paying their rent on time, getting along with their diverse neighbours, taking care of facilities and managing their time in order to get to the bus on time!
At IHS private residences, this is achieved through providing and enforcing House Rules. Students are encouraged to participate in sporting activities offered on campus, and residences sponsor soccer and netball teams. Other realities of accommodating bursary students on a large scale include ensuring that students are comfortable enough to approach staff about issues such as not being able to afford buying food, personal problems and feeling overwhelmed by the stress of being a student.
Many tertiary institutions run feeding schemes, with which IHS residences partner to ensure that students are not literally starving their way through their student years.
In addition to important considerations such as safety and a healthy, clean environment, there are more social aspects of student life that are also addressed to ensure students in private residences do not miss out on the student experience:
· The presence of a House mother / House father so that students may have someone to talk to. Many are very far away from home and they do get home sick.
· Interaction with universities to include students in in-house student activities. These include sport and academic monitoring and recognition.
· Social functions
· Transport to and from university
See graphic below
* FET student funding increased from 61 700 students/R 318 million in 2010 to 222 800 students/R 2 billion in 2013