Varsity expansion stokes Potchefstroom property market

Student numbers in Potchefstroom are growing exponentially thanks to the expanding faculties at the North West University - and the local property market sector that caters for the student population is expanding in similar fashion.

The new engineering faculty is set to be followed by faculties in other disciplines and while the university is building a large new student residence and upgrading existing residences, it is unlikely to cater fully for the increasing number of students enrolling at the institution, says Jaco Faurie, who obtained the local RealNet franchise in partnership with Pierre Ludick at the beginning of September.

Student accommodation is already at a premium, he says, a fact reflected in high unit prices. "Very compact one-bedroom units of 41sqm now coming on to the market command prices of around R750 000.

"And there is little buyer resistance even at these levels as parents of prospective students who do not gain places in res view units as an excellent investment - and a better option than renting for the duration of their children's tertiary education.”

One cannot fault their logic, he says, because rentals are also at a premium. For instance, an older two-bedroom unit selling for R665 000 will quickly draw tenants at a monthly rental of around R5000. “An investor who paid a 20% deposit would thus comfortably cover his bond of about R4600 per month and the monthly levy of around R350 with his rental income."

Indeed, Faurie says, investors are very active in the market. "We had two investors approach us in the first month after opening the office with a view to invest in student accommodation after withdrawing bank deposits. They had become disenchanted with low yields due to low interest rates and viewed buying local student units as a far better investment.

"In another case, the father of a primary school learner decided to invest now in a student unit, which he will rent out until his child attends the institution in a decade or so."

Faurie says that not all parents have the means to buy units so far in advance, but he advised parents nevertheless to buy as soon as they can, rather than wait for the start of their children's tertiary education.

"For one thing, parents who buy early have the luxury of scouring the market for the best deal and will earn income until such time they need the unit for their own offspring.  Most parents, however, start scouting around August for the following academic year and while early birds may find good deals, those who wait until the end of the academic year have fewer choices - and sellers know that they will get their price because of the strong demand."

Student apartments with two bedrooms and priced at R650 000 to R800 000 are currently in highest demand, he adds.

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