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Grants create certainty for investors in student accommodation

Private property development for student accommodation remains limited in Durban, despite the potential this sector holds for investors. Current student housing developed across the Durban Metro is primarily affordable housing units. 
Frank Reardon, divisional director for Broking at Broll KwaZulu-Natal, says developers and property owners capitalise on leases with institutions such as the Durban University of Technology, the University of KwaZulu-Natal and Mangosuthu University of
Technology. 
However, there still remains considerable opportunity for private student accommodation
in prime locations close to the institutions and with additional services at higher price points. 
“Mobilising ‘on campus’ opportunities across all institutions in terms of Private Public Partnerships could yield considerable additional opportunities in the future. There is a huge shortage of student accommodation in the Durban Metro, as is evidenced by widely
publicised student demands.” 
Reardon says grants paid in terms of the government’s National Student Financial Aid Scheme, that “effectively pay the rent of students who qualify for grants”, have created certainty for developers who have
developed or converted buildings to capitalise on the opportunity. However, he says, there remains “huge opportunity in this space”.
“Residential and office buildings that can be converted in Central Durban, including the CBD, and properties situated close to
the institutions, including those in the Berea, Glenwood and Umbilo, remain the most popular.” 
He added that Broll is currently offering a building in Durban CBD, 320 Pixley/West, that would suit this purpose. “There is huge interest from developers for conversion of this 30-storey, 36 000m² office block to residential and student housing.” 
The Department of Higher Education and Training says more can be done by the private sector to develop properties for students, and not only those who hail from affluent families. 
This building in the Durban CBD is on the market and is attracting interest from developers for conversion to residential and student housing. Picture: Broll
Developers can work more closely with universities and colleges to develop student housing that is affordable for most students who pay rent from student loans or bursaries, the department believes. 
“Developers generally build student accommodation for affluent students whose families can pay R6 000 ormore a month for a flat close to campus. However, most students can’t afford high rents and end up living in backyard rooms far from campus, and travelling long distances by train and taxi,” it says. 
“The private sector could play a significant role in financing and developing affordable, accessible, safe and decent student housing on, or very
close to, campuses in partnership with universities and colleges.” 
Student accommodation was highlighted
by the Pam Golding Property Group as a “hot spot” in property this year. Chief executive Dr Andrew Golding says property close to universities and tertiary institutions is increasingly popular. This includes conversions of houses which are let room by room, giving investors significantly greater returns compared to a single lease over the property. 
“There is a severe shortage of student housing. Flats in central blocks with excellent security, quality finishes and a mix of tenants are highly sought-after.”

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