Investing in student accommodation: What do students want?
Student accommodation countrywide has become a popular investment choice for property investors and professionals alike. We have all seen the ‘accommodation crisis’ cries each February at our tertiary institutions regarding housing shortages, but is there a demand for more off-campus housing?
We thought we would breakdown the numbers for you, and then give some feedback from DigsConnect, South Africa’s largest online student accommodation marketplace (the Airbnb of student accommodation).
If we first take a look at the number of students vs the residence numbers at the University of Cape Town it becomes clear that the accommodation shortage is real:
UCT: 26 357 students. +- 6000 students have places within the university residence system
But then why do so many student rental properties sit with no tenants?
What are student accommodation property owners doing wrong?
DigsConnect was started by Alexandria Procter and Greg Keal, both UCT (and SRC) alumni. Their aim – to find a solution to the accommodation shortage and make the process of finding a place to live that much easier.
The experience they have as recently graduated students, as past UCT SRC members and their two years in the student accommodation space has given them a really clear insight into what students want, and what landlords are doing wrong.
Here are their top 5 tips:
Students want to be in the hub: close to 'everything'. At UCT they have found that the most popular search criteria on DigsConnect is location. Specifically; Rondebosch, Rosebank and Claremont.
Most students don’t have cars, so being in walking distance to shops and points of interest is a huge value-add.
This is without doubt the biggest factor that students seem to take into consideration, and is usually linked to location.
Many universities have their own transportation, and being within walking distance of these stops is a major selling point.
The DigsConnect team have found that furnished units within walking distance of the university or university transport routes get the most responses and are filled the quickest.
They have found that rentals above R6 500 per month per room receive very little interest – regardless of the standard. Below R5 000 per month for a double room and you’re in serious business!
They have also found that units with sharing rooms (i.e. 2 persons per room) in the R3 500 – R4 000 price bracket close to tertiary institutions have garnered huge interest.
While it security generally comes second to location for many students, it is often the parents that want to ensure that their children are in a safe environment. This means burglar guards in apartments and electric fencing for houses.
They could not stress the importance of furniture enough.
Students often move into a digs or apartment after being in res for a year or two and have little to no furniture. It is highly unlikely that they will be able to furnish a property.
They recommend that if you want to avoid furnishing the entire house/apartment, that you at least buy the big ticket items such as beds, couches and kitchen appliances. Everyone has a spare side table or TV that they can bring into a digs – but the bigger items are much more challenging.
The DigsConnect tip would be to go to cash crusaders or OK furnishers and buy the items fairly cheaply. Students are generally happy with simple but practical and comfortable furnishings.
"Furnished places are rented our far quicker (and for far more) than similar unfurnished places" says Alexandria.
The student market is different to the young professional market.
It is important to know these distinctions and to design your properties around the market you are trying to attract. Get it right and you will have a serious money-maker, get it wrong and you’ll have difficulty finding a stable tenant.