Untangling the Pandemic’s Impact on South African Student Accommodation

The ongoing Covid-19 pandemic has affected many industries at large, and one in particular is Real Estate development. Local universities are taking major strain in light of the cost of shifting to e-learning, huge losses in revenue, and wildly unpredictable 2021 enrolments. Furthermore, because of widespread job losses, parents’ spending potentials are generally lower – this means that the need for affordable, accessible student housing is more important than ever. In this article, we unpack the affects that the pandemic has had, and will have, on student accommodation.

The medium- and long-term consequences of the pandemic demand unconventional economic policy measures globally because of months of economic disruption and in some cases, relative stagnation. IOL reported that in South Africa, infrastructure investment was identified as a way to re-stimulate the economy.

South African president, Cyril Ramaphosa, has made infrastructure development the basis of the Economic Reconstruction and Recovery Plan for the post-pandemic economy, and the government hopes to stimulate one trillion Rand in infrastructure investment over the next four years. The Development Bank of South Africa has named student accommodation as one of its top priorities in line with president Ramaphosa’s Recovery Plan, meaning there is huge potential for these developments in the near future.

Importantly, during the project feasibility stage, these developments (and, in turn, developers) should be cognisant of the National Student Financial Aid Scheme’s (NSFAS) rates so that state-funded students are ultimately able to afford the residences. The challenge student accommodation developers face is this: they must see past current global circumstances, and envision a forward-thinking reality in which student accommodation is safe, affordable, and readily available to students across the country.

Ben Verhoef, Property Advisory Director at Cresco, notes “We forecast the NSFAS-focused student housing development market growing exponentially and returning to normality during 2021. This is premised on the specific dynamics of the underlying needs of previously-disadvantaged students for safe and secure accommodation to ensure academic success.”

This will ultimately make tertiary education more accessible to those in lower income brackets and the thousands relying on NSFAS funding – thereby undoubtedly contributing to enormous growth on the continent by making higher education a reality. Moreover, the investment in these developments will serve to help kickstart the South African economy after months of turbulence and lay the foundation for long-term economic growth.

In 2016, Cresco became involved as sweat equity partner in a 222 bed NSFAS-focused Student Accommodation project in Johannesburg. This project was completed and occupied towards the end of 2017, and was accredited by the University of Johannesburg. This was a stimulating experience that left Cresco well-poised to assist project promoters with first-hand knowledge and experience in successfully executing similar projects.

Speaking to the market at large, Ben adds “From various approaches by cross-border promoters, we know that the demand for affordable Student Accommodation is far exceeding the supply in various other African jurisdictions. Expansion within Africa is a focus area we have ear-marked for further investigation and development.”

At Cresco, we integrate entrepreneurial thinking with our specialist expertise to deliver unparalleled advisory services. We are proud to Enable Growth in Africa, and our real estate financial advisory portfolio is a testament to this. How can we help you grow the continent? https://www.crescogroup.africa/contact-us/ 

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