There is a shortage of student accommodation in South Africa, which means there is an opportunity to develop solutions for the sector. With the Department of Higher Education and Training estimating there is a student accommodation shortfall of approximately 250 000 beds, without accounting for students in Technical and Vocational Training (TVET) colleges, the need is substantial. Furthermore, student accommodation will need to scale rapidly to meet government's intention of increasing tertiary enrolments to 1.5 million students by 2030.
Eris Property Group has therefore been exploring the student accommodation market and researching the local landscape over the past few years. The company has identified three key opportunities it hopes to capitalise on in the South African student accommodation space.
Johan Janse van Vuuren, Property Development Manager at Eris, says that although the company has not typically been involved in residential property development and management, the significant gaps in the student accommodation market warrant expanding the company's offering. "While the South African market lags about three to five years behind global trends in student accommodation, there are opportunities for investors in student accommodation, for developers and for property managers," he says. "Eris has plans to be active in all three of these areas."
Momentum Property Opportunity Fund is a 50% investor, alongside WBHO, in the first development, Units on Park. Eris has also received substantial interest from investors in its Student Accommodation Impact Fund, which it will be launching soon to house the rest of the proposed development pipeline.
On the development front, Janse van Vuuren says that Eris has developed a new sub-brand, Rise Student Living, under which it will develop its student accommodation projects. "Our development philosophy embarks on providing accommodation that offers strategic choice of locations, coupled with cutting-edge design and exceptional build quality," he says. "We have based this philosophy on six core elements: affordability, convenient locations, quality accommodation, safety and security, great student experiences and health and safety. All our student accommodation is also designed to meet minimum norms and the standards requirements of the Department of Higher Education."
While Janse van Vuuren says that Eris has limited prior experience in developing student accommodation, two years has been dedicated to research and the company's professional teams comprise experienced partners, who bring their track record and knowledge to the table. "They are helping us to navigate the nuances of student accommodation, such as having leases with hundreds of student tenants for 10 months of the year instead of three or four commercial tenants in a building over a five-year contract," he says. "We've had to design different security protocols and common area amenities and grapple with the differences in cash-flow. The cash-flow on a student development is less sensitive to economic cycles than a commercial property, but less secure in other respects."
The first development under the Rise Student Living brand is Units on Park, aimed at University of Pretoria students, which is currently accepting applications for occupancy in January 2020. The development offers 52 bachelor units, 26 rooms with a single bed, and 221 double rooms.
Thalitha Ramusi, Development Manager, says that the development, which is located just 200m from the Hatfield Gautrain Station and 600m from the closest campus entrance, is already garnering interest from students and parents alike. "We'll have 998 beds available and our focus is on maximum student convenience at the best value possible," she says. "We're offering shared and single rooms, with wings on each floor of the development dedicated per gender, as well as recreational and academic facilities, free WiFi, kitchen facilities or canteen dining, depending on the option selected, laundry facilities, and 24/7 onsite management."
Janse van Vuuren says that Eris is also fortunate to be partnering with a trusted co-investor, developer and contractor on the project in WBHO, which gives further credibility to the project.
He notes that Eris Property Group's final arm of its student accommodation strategy is property management. "In other countries, we've seen that there are companies that just do student accommodation property management, whereas in South Africa, it's only the accommodation developers that do property management, and only within their own facilities. We believe there's an opportunity for a company like ours - which already has experience and access to economies of scale in property management services - to offer outsourced student accommodation property management to universities and property owners," he says. "Again, student accommodation management has different sensitivities to our commercial management offering, but we are looking to get our foot into this sector and, as we learn, to grow our footprint in this space."
For more information on Eris Property Group's student accommodation portfolio or on Rise Student Living, visit www.eris.co.za/student-accommodation/.