High Demand for Student Housing in South Africa.

It is estimated that there were 2.55 million students enrolled across all tertiary institutions (universities and Technical and Vocational Education and Training colleges (TVET)) in South Africa in 2020. Public universities make up the largest portion (44.9% of all students), followed by TVET colleges (30.9%).

Enrolments at public universities are estimated to grow to 1.2 million, and TVET college enrolments are set to reach 1.03 million by 2023. Accommodation is available for only 20% of university-enrolled students, excluding other higher education institutions. This does not compare well with the global average of 50%.

 

1. The number of beds available. As of 2020, there were approximately 223,000 purpose-built student beds available in South Africa for public universities and TVET college students. Given a calculated combined enrolment of 1.19 million post-school education students at these institutions in 2020 and a bed-to-student provision ratio of 68%, there is an estimated supply-demand gap of approximately 511,600 beds. With enrolments set to grow to almost 1.6 million by 2025, this demand gap is set to grow to around 781,000 beds by 2025. Of this demand gap for student beds, approximately 59% will be for TVET colleges. Considering the expected increase in purpose-built student accommodation (PBSA) beds by 2025, about 84,000 beds are expected to be driven by students funded by the National Student Financial Aid Scheme (NSFAS), assuming current funding ratios remain the same. As part of the agreement, the Department of Higher Education and Training, The Development Bank of Southern Africa and the National Treasury committed to coordinate support to the Student Housing Infrastructure Programme, in line with the need for an enabling environment for private and public investment in student housing. The programme aims to facilitate private sector investment to help the country deliver 300,000 student beds over the next 10 years.

 

2. PBSA, in this market assessment, can be divided into three primary segments: the affordable, mid, and high-end markets; across private and public accommodation and. the development of private accommodation, which has mainly driven the PBSA in the last decade. However, private developers have, to date, mainly been catering to the mid- (R 3,000 – R4,500 per month) and high-end market (R 5,000 – R8,000 per month). This has created a wide gap between affordable and mid-level student accommodation. Assuming a bed costs R 225,000 on average to build, an annual rental rate of more than R 40,000 per annum would be needed to make a student accommodation development feasible from a private developer’s perspective. The typical expenditure per bed will be allocated as follows: 78% on construction cost, 3% on furniture, kitchen fittings, 1% and cabling for Wi-Fi etc and 16% for other costs. What needs to be considered is the prescribed requirements of NSFAS. The units need to be furnished. The developer must have many aspects in place, such as security, restricted/controlled access, and proper plans for electricity and water (students cannot study without lights). The developer must consider breakages, vandalism, and theft. In addition, the annual income applies to 11 months of effective occupation, but expenses are for 12 months. Each year, the tenancy starts afresh, and the building must be ready to be viewed at the latest, beginning of January. Bad debts and vacancies must be provided for. Many students do not finish the academic year. Where many people reside, there must be order and strict rules that are acceptable and enforceable by the landlord.

 

3. There is a huge demand for student accommodation. There must be some stumbling blocks that prevent this need to be filled. And there are many of which the most important issues are the cost of providing the required beds at the “affordable” rentals. With the advent of Covid, one of the side effects was the significant drop in demand for office space. This created the opportunity for developers to convert existing vacant office buildings into student accommodation units. Still, not every building is suited to a commercially viable conversion. Although, there are many positives in such a venture, such as a basic structure of bricks and mortar, doors, windows and some required plumbing, water and electricity supplied to the building.

 

4. The tragic state at our most important University. In May 2023, Minister of Higher Education, Science and Innovation, Blade Nzimande, in accordance with Section 47 (2) of the Higher Education Act 1997, published the Report of the Independent Assessor, Professor Themba Mosia, on the investigation conducted into the affairs of the University of South Africa (Unisa). The Minister plans to place Africa’s largest distant-learning university under administration. Mosia’s report revealed that the council did not have the requisite skills and competencies to provide strategic guidance to ensure Unisa becomes a modern distance education university. These findings are nothing short of a national disaster and a major blow to the ruling party. Our country deserves much better than this. An Institution such as Unisa should never be allowed to deteriorate to this level. The report also uncovered rampant corruption and the flouting of finance, information and communication technology, human resources and supply chain management policies, with the council, senate and executive management being found wanting and not acting in the best interests of the university.

 

5. Some interesting statistics from the report is that, of the total number of students of 363,020, there were 255,795 female students and only 107,225 male students. It is also quite noteworthy that of the total, only 7,8% of these students were white, whilst black students made up 83,4%, and the Indian and coloured population, together, made up 7,8 % as well. Despite there being 26 public higher education entities, Unisa’s students made up 36% of these students. The statistics show who is at the receiving end of this maladministration that is rife at all government institutions. The voters of the future are taking note.

There is much to be learned from this report, and the lack of coverage in our media on this important issue is indicative of how the general state of failure at so many of our institutions due to a general lack of accountability and consequence management has made us blunt in our reaction.

 

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