South Africa's student accommodation crisis has reached a breaking point, leaving thousands of students struggling to find safe and affordable housing.
Amid a surge in university and other tertiary enrolments, South Africa's student accommodation shortage is posing significant challenges, exacerbating inequalities and disrupting academic pursuits.
The private sector in South Africa is actively addressing the country's student accommodation crisis by investing in purpose-built student housing and partnering with universities to provide affordable, secure, and convenient living options for students.
Companies and developers are stepping in to bridge the gap left by insufficient university residences, constructing modern facilities that cater to the growing demand.
These private accommodations offer a range of amenities, including high-speed internet, study areas, and recreational spaces, aiming to create conducive environments for academic success.
By focusing on strategic locations and incorporating innovative designs, the private sector is not only alleviating the pressure on existing university resources but also enhancing the overall student experience, thereby contributing to the broader goal of improving higher education outcomes in South Africa.
Two years since launching, Growthpoint Student Accommodation REIT has introduced R1.5 billion in new investment to this alternative property sector, added 4,000 new beds for students and created a strong pipeline of future developments.
Its demonstrated execution has expanded its portfolio value to approximately R3.5 billion, representing 12 residences with 9,000 beds in three South African cities – Cape Town, Johannesburg, and Pretoria. With two new developments in the ground, it expects to increase its beds to 10,400 for the 2025 academic year.
The REIT was launched in December 2021 by Growthpoint Investment Partners, the co-investment business of SA REIT Growthpoint Properties.
It invests in purpose-built student accommodation located and designed around students to help them succeed and make the most of their university experience, according to Amogelang Mocumi, Fund Manager of Growthpoint Student Accommodation REIT.
Two new properties opened in the portfolio for the 2024 academic year. Horizon Heights in Johannesburg is 99% occupied for its first year of housing students, proving popular with those from the nearby University of Johannesburg as well as the University of the Witwatersrand.
Fountains View in Pretoria is 98% full, primarily let to students from Sefako Makgatho Health Science University (SMU) and the University of Pretoria’s Groenkloof campus.
“Our high occupancy levels demonstrate strong demand and the commercial success of our purpose-built student accommodation model, which is supported by quality development and the Thrive Student Living brand, which resonates with our target market,” said Mocumi.
Continuing its growth, Growthpoint Student Accommodation Holdings has two new properties under development for the 2025 academic year: a R300 million 900-bed property located in Braamfontein and a R200 million 500-bed located in Parktown, both targeting Wits University students.
It is also planning a development near the University of KwaZulu-Natal’s Howard College Campus in Durban for the 2026 or 2027 academic year intake.
“Investors remain positive about purpose-built student accommodation, even while they have short term reservations about the commercial real estate asset class as a whole,” said Mocumi.
Growthpoint Student Accommodation REIT aims for total returns of 13% to 16% in the long-term. Its target is to grow the portfolio to R12 billion worth of assets and achieve a stock exchange listing within the next seven years.
The group's Thrive Student Living portfolio benefit from recognised green building leadership, creating healthy, sustainable environments and operating with a social consciousness that adds value to communities.
Thrive Student Living accommodation provides amenities like study areas and games rooms, backup power and water, as well as its Student Life programme which offers 24/7 support to students for academic performance, physical health, and mental wellness.
Adamou Labara, the IFC’s country manager for South Africa, has highlighted a pressing issue in the higher education sector of Sub-Saharan Africa: the acute lack of quality, affordable student housing. He points out that South Africa’s universities face a significant shortfall, with a current deficit of 511,600 beds.
This gap is projected to widen dramatically, reaching an estimated 781,000 beds by 2025 due to rising student enrolments, as reported by University World News.
The scarcity of on-campus accommodation has led to a majority of students seeking housing off-campus, a trend that is common across the region due to insufficient construction of student hostels.
The IFC’s data reveals a stark ratio in South Africa’s major public universities: only one available bed for every 3.3 students, underscoring the urgency of addressing this housing crisis.
In May, privately owned construction company GVK-Siya Zama completed construction of a 20-storey, 3 000-bed student accommodation block in Cape Town.
The 77 000 m2 development also includes 6 700 m2 of retail space and a public square. The property, first having served as a train station called Cape Station, was developed into a mixed-use residential and retail space following a R1-billion contract awarded to GVK by Eris Property Group.
The One Stellenbosch, a new private student residence, is also set to deliver 508 units by December 2024, just in time for the 2025 academic year.
Led by a consortium of seasoned developers and construction firm WBHO, the development has already attracted property investors and parents of current and future Stellenbosch University students, driven by the severe shortage of quality accommodation in the area.
Demand for premium student housing in Stellenbosch Central far outweighs supply, as evidenced by over 1,500 rental enquiries for The One, primarily through word-of-mouth. This high demand underscores the critical need for quality student housing.
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