Today’s promising real estate investment opportunities in South Africa prominently feature student accommodation and affordable housing. These sectors deliver high yields, enduring demand, and impressive occupancy rates, making them sound choices for short-term and long-term investment.

High Yields

Higher yields are the hallmark of student accommodation and affordable housing, outperforming traditional residential and commercial properties. Contributing factors include:

• Strong demand: According to the International Finance Corporation (IFC), South Africa has a shortfall of over 500,000 beds in student accommodation.
• The increasing student population fuels this: Nearly 1.6 million students are expected to be enrolled in tertiary education by 2025.
• Lack of affordable options: Many of these students come from low-income families.
• Low vacancy rates: The constant demand ensures low vacancy, particularly as students often opt for longer rental periods.

Unwavering Demands

The need for student accommodation and affordable housing remains constant irrespective of economic fluctuations. Even during recessions, enrollment in tertiary education continues, underlining the resilience of these investment avenues.

High Occupancy Rates

A recent study by JLL revealed that in 2022, student accommodation in South Africa had an average yield of 9.5%, outperforming other sectors. Moreover, according to the South African Property Owners Association (SAPOA), occupancy rates averaged 90% in the same year.

Why Investors Should Focus on these Sectors

South African investors find themselves in a particularly advantageous position for several reasons:

• Economic Growth: The expected economic growth in the coming years will likely boost student enrollment and housing demand.
• Regulatory Support: The government offers tax incentives and financial support mechanisms, encouraging investment in these sectors.
• Skilled Workforce: South Africa’s talent pool is more than adequate for the development and management of such properties.

Conclusion

Student accommodation and affordable housing stand out as two of the most lucrative investment opportunities in the South African real estate market. They offer a robust combination of high yields, enduring demand, and high occupancy rates.