Student accommodation market attracts investors internationally

Aengus Investment Properties expands internationally as emerging market student accommodation attracts investors' attention.

As education levels improve and millions more students attend universities in the BRICS countries (Brazil, Russia, India, China, South Africa), emerging market student accommodation as a sub-sector of commercial property is attracting the attention of forward-looking investors.

“This is an untapped market, particularly in emerging economies,” says CEO of student accommodation specialists, Aengus Investment Properties, Richard Rubin.  “Whether you’re in Rio de Janeiro or Accra, there is a severe shortage of safe, secure, affordable accommodation for students globally. It’s proving to be an excellent investment opportunity regardless of macroeconomic conditions affecting the property environment.”

Historically, accommodation for students has been provided by tertiary institutions themselves, but as operating budgets are slashed and property becomes increasingly expensive to acquire and maintain, many universities are outsourcing the provision and management of student accommodation to independent companies and in many instances partnering with them to do so.

In Europe, listed student property funds have been around for quite some time. Publicly quoted players such as Unite PLC and Opal are well known to equity investors; however a niched emerging market private fund, such as Aengus is new.

The company, which has nearly 10 000 student beds in its international portfolio, has pioneered up-market student accommodation in South Africa and has now set its sights on expanding into Africa and South America.

“The fundamentals of the market remain strong: insatiable demand, consistent revenue streams and above-average investment returns.”

Aengus has been in the property game – mostly urban renewal projects - for nearly a decade, but started buying up buildings and converting them to student accommodation about six years ago.

“Universities simply couldn’t provide enough accommodation for the increasing numbers of students,” says Rubin.  “We started by converting one or two inner-city buildings in Johannesburg, South Africa from offices into residential accommodation suited for students and within weeks of opening, all our buildings were fully leased.”

Since then, growth has been phenomenal – Aengus now has 7 000 student beds in South Africa, including Johannesburg, Port Elizabeth and Durban.  At the start of the 2013 academic year starting in January in South Africa, the waiting lists for the company’s student buildings already far outstrip the number of rooms available.  The number of school leavers increases year-on-year.

“Key to our success has been understanding that students are not that different to any other type of residential tenant,” says Rubin.  “They’re looking for safe, well managed accommodation in a convenient location.”

Aengus spent much time researching what students wanted and designs its buildings so students get the most out of their university experience.  Rentals include fully furnished apartments or single rooms with all the mod-cons, including free access to broadband internet, as well as communal areas and services such as laundries and cafes, all situated close to campuses.

“Education is a massive investment for families and sponsors, so students are looking for value for money when it comes to accommodation. But this doesn’t mean cheap and nasty – these are discerning customers.”

Aengus works in partnership with higher education providers, as well as renting directly to students and corporate bursars, a growing funder of student accommodation as the demand for talent increases. Aengus manages the entire process from acquiring buildings, to converting them to student accommodation, renting and maintaining them.

“Because we’re used to the complexities of the South African market where the political and economic landscape is constantly changing, we’re well positioned to expand into other emerging markets where there is massive demand for our kind of offering,” says Rubin.
Outside of South Africa, Aengus has set up permanent offices in Rio de Janeiro, Brazil and Accra, Ghana.  The company has partnered local players to ensure a low-risk approach to securing new deals.

The company’s first Greenfields student accommodation project with 2 000 beds has recently kicked off outside Accra, with plans to build more beds in the region soon.  It will open its first student buildings in Brazil this year too.

Rubin says the company’s business model will also benefit from big events – such as the upcoming Olympics and Soccer World Cup in Brazil.

“Our business is designed to be sustainable beyond these once-off events, but we certainly score from renting out our student rooms to tourists during these peak periods.”

“By the end of 2013 we should have 3 000 student beds outside of South Africa and it seems opportunities for growth are endless,” says Rubin.  


  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
    • 21 Feb 2018
      These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    • 20 Feb 2018
      A major shift in the ageing paradigm has precipitated an equally dramatic transformation in the retirement sector, with modern accommodation options worlds away from the conventional model.
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us