The Time Has Never Been Better To Invest In Student Accommodation
Category Property News
Record low interest rates and favourable lending attitudes from the banks mean that now is the perfect time to invest in property in South Africa. And while the time is ripe - student accommodation is a property investment that should not be overlooked.
This is according to Paul Upton, Head of Developments at DG Properties, who advises that many South Africans are of the mindset that it is better to purchase their own home - if they can - rather than rent, and effectively pay off someone else's bond. Often the rental being asked on a property is not much less than what one's bond instalment would be if you purchased that property yourself.
"Interesting to note is that the same applies when it comes to student accommodation for varsity going children. Most of our public universities have student residences, however the demand for accommodation far exceeds the supply, resulting in thousands of students having to find alternative accommodation close by."
Upton gives some advice on the cost of renting student accommodation versus purchasing an apartment.
"Consider the cost of accommodation at a private residence in Cape Town: A quick search will show that R7500 may get you a small student/bachelor pad with a kitchenette. Some of the more upmarket private and secure residences in safe locations can ask R10 750 upwards per month for a private room in shared accommodation."
"If enrolled for a three-year degree parents could expect to spend in the region of R387 000 for accommodation. If they opt for further post-graduate studies you could be looking at as much as six years, with a total cost of R774 000 - that is not budgeting in a yearly increase in the cost of this accommodation. This is money spent without the possibility of return," says Upton. "And also only factors in one child - what if you have two, three or more children that all need to go through university? Add up what this does to your total accommodation costs through the years."
"Now consider the cost of purchasing an apartment. There are many desirable and affordable developments going up in Cape Town's CBD which offer apartments in the region of R1 million/R1.5 million, including VAT and transfer duty - with the current interest rates this would equate to a bond instalment of approximately R 7 640 per month - up to
R 10 466 per month if you were to put down a 10% deposit."
"Developments like the newly launched Station House in Sea Point - with prices starting at R1.595m; The Ivory, also in Sea Point - with prices starting from R1 450 million; 1 On Albert in Woodstock - with prices starting from R1 095 million; Castle Rock in Zonnebloem - with prices starting at R1 495 million; and Foreshore Place in the Cape Town Business District - with prices starting from R1 164 million, all offer exceptional value for money, perfect student accommodation and a promised return on investment."
According to Upton, for your money these developments offer close proximity to the tertiary institutions, access to public transport, security, luxurious finishes, state-of-the-art perks such as fibre connectivity, communal living spaces, laundromats, restaurants and more. Making them highly desirable in the property market.
"Once your child has graduated, should you not have need of the apartment (perhaps for siblings following suite) then you have a sell-able asset that will not only return your capital investment but promises a tidy profit as well," says DG properties. "Another option is to keep the apartment and rent it out to other students who will in effect then pay your bond or go a large way towards paying your bond installment. If you can afford it, buying a two-bedroom unit is also a good option because the second bedroom can be rented out to someone else, giving the parent an extra income."
"Many investors choose student housing for the yields it produces. Accommodation close to higher learning institutions can pack more income per square meter and also guarantees year-on-year tenants," concludes DG. "Parents who are in a position to consider purchasing property to house their children during their student years will not go wrong by looking at these inner-city developments."
For more information contact 021 433 2580.
Author: PR