You may be surprised to hear that the real estate industry has not slowed down in response to COVID-19- in fact, it’s booming. However, real estate investors have had to make several adjustments in order to properly cater for the new demands of tenants. This is particularly true when it comes to student accommodation.
Johannesburg’s WITS University, home to 37,000 students, transitioned to e-learning earlier this year. However, they found that some 15% of their student population had no access to a computer or laptop to virtually attend classes. In response, the Vice Chancellor asked Alumnis for donations and 5000 donated laptops flooded in in less than a month, which allowed all of the students to access the new e-learning platforms.
While COVID popularized e-learning in South Africa, experts say it may be here to stay. So, what does that mean for real estate investors?
Right now, the student accommodation sector is experiencing:
Increased demand in amenities suitable for e-learning
Inexperienced or beginner investors may look at this list and think, Well, now isn’t the time to invest in student accommodation! On to the next sector.
That’s where they’re wrong. What’s actually happening in South Africa right now is the creation of a new market for student accommodation.
Craig McMurray, CEO of Respublica Student Living, has said that the student accommodation sector is stable and more predictable in macro-economic cycles, which is why it is so resilient.
In a recent conversation with my friend Grant Smee, his sentiments echoed Craig’s. Grant is an entrepreneur, property investor and Managing Director of several businesses including Only Realty, a Residential Letting Agency Franchise Group, and EPIC South Africa, an Entrepreneurship Hub aimed at educating and supporting property investors.
Grant manages student accommodation communities with multiple tenant units. All of these properties are privately owned with no NSFAS involvement. When asked about how student accommodation has performed during COVID, he said that “Because my student accommodation units are available to any tenants, and are at an affordable level, they’ve done well in terms of occupancy and payments.”
According to TPN Credit Bureau’s Student Rental Monitor Report, 94% of parent-paid South African student accommodation tenants are in good standing with their landlord, while 77% of student-paid tenants are in good standing. While these numbers have changed slightly due to the pandemic, student accommodation is reportedly the most resilient real estate sector. These numbers will return again- possibly sooner than you think.
Students are itching to return back to campus and, sooner or later, they will. In fact, higher educational institutions around the country are brainstorming how to make this happen ASAP. However, serious changes need to be made in order to comply with COVID safety measures and the new e-learning norm.
Universities all around the world are making adjustments to their student accommodations. In the UK, many Universities are implementing increased sanitisation measures and contactless temperature scanners, as well as changing the design of common rooms and constructing more single rooms.
Here are the major features that will be in high demand in the new student accommodation market:
Single rooms: While many student accommodations offered single room options before, it is going to become the new industry standard. In the COVID era, students need to be able to self-isolate for quarantine and precautionary measures.
More bathrooms: We know that COVID can spread rapidly, especially when people share spaces. This extends beyond bedrooms and includes bathrooms, as well. It’s no longer safe or sanity for dozens of students to share one communal restroom. Instead, there needs to be more restrooms in student residences to minimise the number of students using each facility.
Isolation wards: Isolation wards are crucial to provide housing for infected students so they can remain comfortable and also to limit the spread of the infection to other students in the residence.
Internet capabilities: Many student accommodations offered internet access before, but with more students going online for Zoom classes, to complete assignments and to email lecturers, faster and more reliable internet is needed.
Student accommodation is still a lucrative real estate investment sector. However, you need to be able to keep up with the changing needs of the industry. Student accommodation is no longer about sheer volume- it is about creating value by adding amenities that students cannot live without.
If you can implement COVID-friendly and e-learning-friendly amenities into your student accommodations, students will not only fill your residences, but they will pay extra to do so.
How do you feel about this new student accommodation market? Are you hopeful that it will create new opportunities for investors?
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