Such is the surge in demand for student accommodation in the university town of Stellenbosch in the Cape Winelands, that investors – and parents – are snapping up units in sectional title developments designed to cater for this lucrative market.

According to Louise Varga, Pam Golding Properties area manager for Stellenbosch, Somerset West, Gordon’s Bay and Strand: “The accelerated demand for student accommodation has pushed up property prices, especially sectional title properties close to Stellenbosch University campus.

“This demand translates into meaningful capital returns on investment for astute buyers, particularly those who acquire units on or soon after launch.  For example, a buyer who purchased an apartment for R2.4 million in Beau Vie sold it for R2.8 million a year later, achieving a 17% capital return in just one year.

“In another instance, we sold an entire apartment block Beau Vie 2 off plan to an investor even before it came to market, as he understood and seized the opportunity to capitalise on the high demand for student accommodation in Stellenbosch.”

Continues Varga: “In 2015 a two-bedroom unit in Andringa Walk sold for R2.65 million and was rented out for R9 400 per month, while today, a two-bedroom unit in this development sells for over R4.7 million and achieves rentals of R24 500 a month. The capital growth achieved in eight years is almost 77% while the rental has increased by 160% over the same period, and even during Covid, as rental demand continues to increase exponentially, exceeding supply.

“In 2010, we sold erven in the development, Brandwacht aan Rivier for R995 000 to buyers purchasing off plan, with some selling their erven three months after transfer for R1.495 million – that’s R500 000 or just over 50% more than they paid for them, which underscores the benefit of getting in early on these new developments.

“Furthermore,” says Varga, “a new development like Newinbosch, that offers a wide variety of homes and accommodation plus an endless list of amenities has sold over R200 million in residential property in just five months, on one estate.”