Bank expert urges look at student accommodation

Posted On Friday, 14 August 2015 13:13 Published by
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Student digs have been pinpointed by a leading bank's property expert as being prime territory for investment.

Ken Reynolds

Student digs have been pinpointed by a leading bank’s property expert as being prime territory for investment. Ken Reynolds, Gauteng regional executive at Nedbank Property Finance, said one of the country’s largest property groups had recently acquired a stake in student accommodation company ResPublica.

This showed that there was a growing appeal to enter this market from larger players. Reynolds said South Africa had a massive, continually growing number of school-leavers looking to gain entrance into tertiary institutions.

“Unfortunately, the country’s tertiary institutions simply do not have the logistical capacity to accept more than a fraction of the applications they receive every year,” he said.

He accepted that the student accommodation sector had various challenges for property funds, such as the need to ensure that the accommodation reached its target market. This meant that properties for students needed to be in a more affordable range. Prospective investors would also have to ensure that businesses in this sector had sustainable income-generating capacity to keep the property a viable investment over the long term, Reynolds said.

“On the plus side, the rewards for those funds that are able to strike this balance are potentially significant. “These extend beyond mere financial gain also to include the reputational enhancement of their investment offering,” Reynolds said.

“That’s because education is, and will remain, a clear and obvious social and economic development prerequisite for South Africa. “By acquiring properties that help address the tertiary education shortfalls, property funds put themselves in a unique position to add this vital development focus to their social responsibility portfolios.” 

Source: Herald

Last modified on Wednesday, 19 August 2015 09:27

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