How to successfully invest in Stellenbosch student accommodation
The Stellenbosch property market presents an attractive investment opportunity to parents of students or savvy investors of student accommodation. Whilst supply for premium student accommodation might be in constant short supply, there are various factors influencing a successful investment. Barbara Kriel, property consultant at Fine and Country Stellenbosch, argues that parents or investors need to be even more discerning when pursuing student accommodation as investment: “variables such as proximity to main campus and amenities, security and property size has a significant influence on long-term returns”.
Parents should be careful to over-capitalize on student accommodation
Parents often assume they will be able to sell their student accommodation properties upon completion of their child’s studies on an average of 3-4 years with a good return. However, parents often over-capitalize on the apartment or invest in a property with high levies that all chip-away at investment growth. We have often seen parents break-even after 4 years, with the perception that the burgeoning Stellenbosch market will automatically ‘guarantee’ a good return over the short term. Naturally there is the consideration that ongoing maintenance of student properties are generally higher compared to most residential dwellings, especially those with premium fits and finishes. It is therefore important to approach premium student accommodation with a longer-term perspective, with better returns on 8-10 years.
Investors should buy in bulk to get the best out of their buy-to-let student rental portfolio
Investors of buy-to-let student accommodation will generally get the best return on a 2-bedroom property in an excellent location with a good managing agent or body corporate. The latter is imperative, as higher maintenance associated with student accommodation needs to be managed pro-actively and efficiently by a good resource. Ideally, a portfolio of multiple student properties will better mitigate risk with reasonable levies with new or premium fits and finishes. Whereas most investors believe that modest fits and finishes are sufficient for the needs of student tenants, consider that a marble counter top is a better long-term and durable approach compared to its melamine counterparts.
The Den in Stellenbosch - a prime example.
Recently launched, ‘The Den’ is a prime example of a new property development that presents an attractive long-term student accommodation investment opportunity. Situated minutes away from Stellenbosch main campus and all major amenities, the open-plan apartments boast with premium fits and finishes at a reasonable asking price. Beyond offering parking behind locked gates, the Den offers excellent security and peace of mind to parents with features such as closed-circuit cameras, biometrics and 24-hour security.