Student accommodation in Stellenbosch now a profitable investment

Further evidence that the student accommodation market in Stellenbosch is proving an increasingly popular investment channel comes from Johan Hugo, the Rawson Property Group’s franchisee for Stellenbosch and Franschhoek.

“Not long ago,” said Hugo, “the student accommodation market was a seasonal one in which most of the sales took place from August to December.  Now we find that the market remains active all year round and is increasingly attractive to people from all over the country.”

This market, he said, is largely dominated by investors and the reasons for this are quite simple: the vast majority of students cannot afford to buy and have to rent, their numbers are increasing (the university expects to increase its total intake dramatically by the end of 2015) and the rents on units within walking or cycling distance of the campus have for a long time been very satisfactory indeed.

Asked to give examples of what he would consider good buys in the student accommodation market right now, Hugo mentioned:

  • A one bedroom apartment which is on the market at R690,000 and for which the tenant currently pays R4,000 per month; and
  • A two bedroom luxury unit at priced at R1,795,000, now giving a monthly rental of over R 8,000.

His Stellenbosch franchise, said Hugo, is currently selling, on average, three accommodation apartments per month, all of which have been in the R600,000 to R1,7 million bracket – and all have one to three bedrooms. Prices here, he added, are now rising by at approximately 4 to 6% per annum.

One of the very best financial projects in this specialist field, said Hugo, is Rawson Developers’ 42 unit “The Acorns”. Here the average price is R1,095,000 and all apartments have one bedroom. After a hold up, due to the town’s lacking sewerage treatment capacity, this development has now been given the go ahead and will be completed by mid-2014. Already over 50% of these units have been sold.

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