student accommodation business plan south africa

A Sample Student Accommodation Business Plan Template

By: Author Tony Martins Ajaero

The real estate industry is a very vast industry and new businesses keep unraveling in the industry from time to time. There is a wide range of businesses with good turnover that an aspiring entrepreneur who is looking towards starting a business in the real estate industry can successfully start. One of such businesses is a student accommodation rental business.

This business requires minimal startup capital and minimal manpower and can be started from a home office especially if you are not going to raise money to develop the properties yourself. If you have decided to start a student accommodation business, then you need to write your own business plan.

The essence of writing a business plan before starting any business is for you to have a blueprint of how you would setup, manage and expand your business. Below is a sample student accommodation rental company business plan template that will help you successfully write yours with little or no stress.

How to Write a Student Accommodation Business Plan [Sample Template]

1. industry overview.

Student accommodation business is classified under the real estate industry and the real estate industry is one of the many industries that is a major contributor to the growth of the economy of many nations of the world. As a matter of fact, a real estate agent can become a millionaire ‘overnight’ from just one real estate deal; little wonder the industry is responsible for making many instant millionaires in South Africa, as well as the rest of the world.

The Bureau of Labor Statistics projects 11.1 percent job growth for real estate sales agents between 2012 and 2022, which is about as fast as average. During that time, an additional 38,000 jobs will open up.

south africa is attracting a good number of foreign students and the latest research by Jones Lang LaSalle (JLL) has found that the number of young adults aged 18-25 will increase to almost 100 million by 2022, and that the demand for new, purpose-built student accommodation is set to top 500, 000 beds in the next five years.

Current accommodation arrangements can accommodate fewer than one in five students who apply for residency, and student numbers are growing annually as increasing numbers of young people complete their secondary schooling.

The real estate industry involves the buying, the selling, or the renting of lands, buildings or housing facility. Real estate agency or a real estate agent (broker) is a person who acts as a middleman between the sellers and buyers of real estate. They are involved in searching for sellers who sell properties and buyers who to buy properties.

A real estate agency (brokerage firm) usually receives a payment called a commission for successfully matching a seller’s real estate with a buyer’s real estate need such that a sale or rent/lease can be made. In most cases, the commission generated is shared with other real estate brokers or agents who played their parts in ensuring that the property is sold or rented out as the case may be.

It is important to state that in South Africa, each province has its own unique laws that clearly define the types of relationships that can exist between real estate agencies (professionals) and property owners (clients). Nonetheless, it is always a win – win for both real estate agencies and owners of properties because real estate brokers and their salespersons (commonly called “real estate agents” or “brokers”) usually assist sellers in marketing their property and selling it for the highest possible price under the best terms.

The real estate industry is highly regulated in South Africa and anyone who aspires to become a real estate agent or start a real estate agency must apply and obtain a license before they can legally receive remuneration for services rendered as a real estate agency or real estate broker. But as a lawyer, you can handle real estate deals in South Africa and make your commission without operating as a licensed real estate agent.

The practice is that a real estate licensed agent is required to disclose to prospective buyers and sellers the nature of their relationship within the transaction and with the parties involved in the deal. It is the practice for most standard student accommodation rental companies to also engage in other forms of rental businesses as it relates to properties . Some even go as far as engaging in property development.

Service delivery for a student accommodation rental company is simple and straight forward, especially if they are not involved in other complimentary services within the scope of their business.

2. Executive Summary

Oliver Tambo & Co® Real Estate Agency, LLP is a real estate agency that will operate in all the Province in South Africa but will be headquartered in Cape Town close to the University of Cape Town which happens to be the oldest University with the highest enrollment in South Africa.

We intend to become specialists in owning, developing, acquiring, managing, selling and renting/leasing students’ accommodation, office apartments and hall facilities. This can generally be summed up as clean, safe accommodation within easy reach of campus at an affordable price, and in our experience, the most consistent demand is for newly-built and pre-owned one and two-bedroom sectional title apartments with high tech security, parking and good access to shops and other amenities as well as the campus.

Part of our goal as a real estate agency is to grow to become one of the top 5 largest real estate companies in the whole of South Africa and to rent and manage properties across university campuses in South Africa.

Oliver Tambo & Co® Real Estate Agency, LLP will be committed when it comes to maintaining a diverse portfolio of high quality students’ apartment, office structures and hall facilities. We will also focus on providing a dynamic, proactive and vibrant work environment for all our employees such as discounted rentals for all our student agents and caretakers, and mouthwatering bonus for every deal that comes through any of the staff.

Oliver Tambo & Co® Real Estate Agency, LLP is going to be a self-administered real estate investment trust (REIT). We will engage in a wide range of student accommodation rental services. We will work towards becoming one of the largest student accommodation rental companies in South Africa.

As part of our plans to make our customers our number one priority and to become one of the leading student accommodation rental companies in South Africa, we have perfected plans to adopt international best practices that can favorable compete with the best in the industry. Oliver Tambo & Co® Real Estate Agency, LLP has overtime perfected plans that will help us to become a specialist in our area of business.

Oliver Tambo & Co® Real Estate Agency, LLP will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Oliver Tambo & Co® Real Estate Agency, LLP is founded by Rowland Oliver Tambo, Sean Mbeki and Sarah Zuma. They are the major financiers of the company. R. Oliver Tambo is the company’s president and CEO. Rowland Oliver Tambo has over 10 years of real estate experience in significant senior management positions in the areas of sales, marketing, new technologies and franchise management.

3. Our Products and Services

Oliver Tambo & Co® Real Estate Agency, LLP is going to offer varieties of services within the scope of the real estate industry in South Africa. Our intention of starting our student accommodation rental company is to favorably compete with leading players in the student accommodation rental industry in South Africa.

We are well prepared to make profits from the industry and we will do all that is permitted by the law in South Africa to achieve our business goals and objectives. Our business offerings are listed below;

• Rental of one-unit student accommodation structures
• Rental of two- to four-unit student accommodation structures
• Rental of five- to nine-unit student accommodation structures
• Rental of 10- to 19-unit student accommodation structures
• Rental of 20- to 49-unit student accommodation structures
• Rental of 50- or more unit student accommodation structures
• Rental of manufactured student homes, mobile homes or trailers
• Real estate consultancy and advisory services

4. Our Mission and Vision Statement

• Our vision is to become one of the top 5 student accommodation rental companies in South Africa within the first 10 years of starting R. Oliver Tambo & Co® Real Estate Agency, LLP.
• Our mission of starting a student accommodation rental business is to grow the business beyond the city where we are going to be operating from to become a national and international brand by opening offices all across key cities in South Africa and franchising .

Our Business Structure

Our company’s structure is not entirely different from what is obtainable in the real estate industry, as a matter of priority, we have decided to create a structure that will allow for easy growth for our business, and we have created platforms that will enable us attract some of the best hands in the industry.

We are quite aware that the success of any business lies in the foundation on which the business is built on, which is why we have decided to build our student accommodation rental company on the right business foundation. We will ensure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target.

Oliver Tambo & Co® Real Estate Agency, LLP is aware of the modus operandi in the student accommodation rental line of business, hence adequate provision and competitive packages has been prepared for independent real estate agents. Our marketing department will be responsible for managing this aspect of our business.

Below is the business structure we will build R. Oliver Tambo & Co® Real Estate Agency, LLP on;

• Chief Executive Officer
• Company’s Lawyer / Secretary

Admin and HR Manager

Real Estate Agents

• Business Developer/Sales and Marketing
• Customer Service Executive / Front Desk Officer

5. Job Roles and Responsibilities

Chief Executive Officer – CEO (President):

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization

Company’s Lawyer/Secretary/Legal Counsel

• Responsible for drawing up contracts and other legal documents for the company
• Consult and handle all corporate legal processes (e.g. intellectual property, mergers & acquisitions, financial/securities offerings, compliance issues, transactions, agreements, lawsuits and patents et al)
• Develops company policy and position on legal issues
• Researches, anticipates and guards company against legal risks
• Represents company in legal proceedings (administrative boards, court trials et al)
• Play a part in business deals negotiation and take minutes of meetings
• Responsible for analyzing legal documents on behalf of the company
• Prepares annual reports for the company
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Designs job descriptions with KPI to drive performance management for clients
• Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities
• In charge of leasing and renting out student accommodations and other properties under our list
• In charge of inspecting and reporting on the structural attributes of a building
• Evaluates the component systems of a building (electrical, fire, roofing and plumbing)
• Assesses compliance with building, electrical, plumbing and fire codes
• Evaluates building plans and permits
• Reviews and approves plans that meet building codes, local ordinances and zoning regulations
• Keeps daily logs, including photographs taken during inspection

Marketing and Sales Executive/Business Developer

• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
• Responsible for supervising implementation, advocate for the customer’s need s, and communicate with clients
• Finds and qualifies land for development based on company’s land requirements; maintains a land search database; initiates discussions with property owners about the possible sale of property
• Develops, executes and evaluates new plans for expanding sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managers with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting for one or more properties.
• Responsible for developing and managing financial systems and policies
• Accountable for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

Front Desk/Customer’s Service Officer

• Receives Visitors/clients on behalf of the organization
• Receives parcels/documents for the company
• Handles enquiries via e-mail and phone calls for the organization
• Distributes mails in the organization
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the line manager in an effective and timely manner
• Consistently stays abreast of any new information on the company’s properties that are put up for sale to ensure accurate and helpful information is supplied to clients when they make inquiries.

6. SWOT Analysis

Starting a student accommodation rental business in South Africa comes with its own fair share of challenges, you would have to abide by the law and also compete with loads of other entrepreneurs in the real estate business value chain who also are interested in making a living and building a business in Cape Town – South Africa.

In order to compete favorably in the student accommodation rental line of business, we have been able to hire the services of a tested and trusted HR consultant to help us conduct our SWOT analysis. Here is a summary from the result of the SWOT analysis that was conducted on behalf of R. Oliver Tambo & Co® Real Estate Agency, LLP.

Some of the strengths that we will be bringing to the table in the student accommodation rental industry are our robust relations with student accommodation owners in the whole of South Africa. Also, we have a team of experts that have cut their teeth in the real estate industry cum student accommodation line of business. Our commission structure and relationship with freelance real estate agents in Cape Town and other Provinces in South Africa will also count towards our advantage.

As a newbie in the student accommodation rental line of business, we might have some challenges competing with big time realtors and other student accommodation rental companies that have been in the industry for many years; that perhaps is part of our weakness.

• Opportunities:

The opportunities in the real estate industry especially as a student accommodation rental company is massive considering the rapid growth of university enrollments in South Africa, this trend has been bolstered by highly favorable demographics. We are well – positioned and ready to take advantage of any opportunity that comes our way.

Some of the threats that we are likely going to face as a student accommodation company are unfavorable government and university governing board policies, and global economic downturn. Global economic downturn usually affects spending power and the real estate industry is known to encounter decline in sales and profits during this period.

There is hardly anything we could do as regards these threats other than to be optimistic that things will continue to work for our good.

7. MARKET ANALYSIS

• Market Trends

The market trends in the student accommodation line of business in South Africa is such that international students are targeted since they are the ones who are willing to pay more to get secured and decent students’ apartment. As a matter of fact, security is a key factor when it comes to renting a student apartment in South Africa and next to security is closeness to the campus.

Another obvious trend that is common with student accommodation rental companies in South Africa is that most of them are improvising on more means of making money in the real estate industry and as matter of fact they are also acting as property developers and home staging agents amongst many other functions.

One thing is certain for every student accommodation rental company; if they are hardworking, creative and proactive, they will always generate enough income to meet all their overhead and operational costs, keep their business going without struggle and make reasonable profits from their business deals.

8. Our Target Market

As a student accommodation rental company, our target market cuts across students of different classes and cultures. We are coming into the student accommodation rental industry with a business concept that will enable us work with local and international students who are interested in renting student apartments at an affordable price.

Our Competitive Advantage

The availability of competent and reliable real estate agents under our payroll, our business process, the financial structure of the company, management of a high-quality asset portfolio, superior financial and debt management and of course our pricing model, are part of our competitive advantage.

Another possible competitive strategy for winning our competitors in this particular industry is to build a robust clientele base and ensure that our student apartments are trendy. Our organization is well positioned, key members of our team are highly reliable and competent and can favorably compete with the some of the best in the student accommodation rental industry.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives. We will also engage freelance marketing agents on a commission to help us market our services.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Oliver Tambo & Co® Real Estate Agency, LLP is established with the aim of maximizing profits in the student accommodation rental industry. Below are the sources we intend exploring to generate income for R. Oliver Tambo & Co® Real Estate Agency, LLP;

10. Sales Forecast

It is a known fact that as long as there are students in University campuses in South Africa, there will always be need to for them to hire the services of student accommodation rental companies from time to time.

We are well positioned to take on the challenges that are synonymous to student accommodation rental businesses in South Africa, and we are quite optimistic that we will meet out set target of generating enough profits from our first month of operation and grow the business beyond Cape Town to other Provinces in South Africa within record time.

We have been able to critically examine the student accommodation rental line of business, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions peculiar to similar start – ups in Cape Town – South Africa;

• First Fiscal Year: R200,000
• Second Fiscal Year: R500,000
• Third Fiscal Year: R800,000

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and any major competitor offering same services as we do within the locations we have strong business presence. Please note that the above projection might be lower and at the same time it might be higher since some factors are beyond our control.

• Marketing Strategy and Sales Strategy

We quite mindful of the fact that there are competitions in the student accommodation rental market in South Africa, hence we have been able to hire some of the best business developers to handle our sales and marketing.

Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis to meet their targets and the overall goal of the organization. The training is not restricted to only our full – time employees but also all our freelance brokers that are scattered all over university campuses in South Africa.

Our goal is to become one of the leading student accommodation rental companies in South Africa which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force in the industry.

Oliver Tambo & Co® Real Estate Agency, LLP is set to make use of the following marketing and sales strategies;

• Introduce our student accommodation rental company by sending introductory letters alongside your brochure to students and other key stake holders throughout the city where our company is located.
• Print out fliers (list of accommodations for rent) and business cards and strategically drop them in offices, car parks, libraries, public facilities and train stations et al.
• Use friends and family to spread word about our business
• Post information about our company and the services we offer on bulletin boards in places like car parks, schools, libraries, and local coffee shops et al
• Place classified advertisements in the newspaper, or local publication about our company and the services we offers
• Leverage on referral networks such as agencies that will attract clients (students) who would need our student apartments
• Advertise our student accommodation rental services company in relevant real estate magazines, newspapers, TV and radio stations.
• Attend relevant real estate expos, seminars, and business fairs et al to market our services
• Engage in direct marketing approach
• Encourage the use of Word of mouth marketing from loyal and satisfied clients
• Join local chambers of commerce and industry to market our product and services.

11. Publicity and Advertising Strategy

We have been able to work with our consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the student accommodation rental industry by storm which is why we have made provisions for effective publicity and advertisement of our company.

Below are the platforms we intend to leverage on to promote and advertise our student accommodation rental business;

• Place adverts on both print and electronic media platforms
• Maximize our company’s website to promote our business
• Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, LinkedIn, Google+ and other platforms (real estate online forums) to promote our business and list our properties for sale and for lease.
• Install our billboards in strategic locations in and around the university community in Cape Town
• Distribute our fliers and handbills in targeted areas from time to time
• Attend student association meetings with the aim of networking and introducing our business.
• Ensure that all our workers wear our branded shirts and all our vehicles are branded with our company’s logo

12. Our Pricing Strategy

Part of our business strategy is to ensure that we work within the budget of our potential clients to help them meet their expectations. It is the practice in most parts of the world for properties to be valued by professionals based on the area the facility is located, the type of facility and other factors.

Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable when it comes to fixing a price for our accommodations. But one thing is certain, we will ensure that we make available decent and secured accommodation when have we are contracted to do so.

Lastly, we will ensure that we keep our fees below the average market rate for all of our clients by keeping our overhead low. In addition, we will also offer special discounted rates to our clients from time to time especially when they recommend clients to us.

• Payment Options

At R. Oliver Tambo & Co® Real Estate Agency, LLP our payment policy is all inclusive because we are quite aware that different people prefer different payment options as it suits them but at the same time, we will not accept payment by cash because of the volume of cash that will be involved in most of our transactions.

Real estate deals usually involve huge amount of money. Here are the payment options that R. Oliver Tambo & Co® Real Estate Agency, LLP will make available to her clients;

• Payment by via bank transfer
• Payment via online bank transfer
• Payment via check
• Payment via bank draft

In view of the above, we have chosen banking platforms that will help us achieve our plans without any hitches and we will also pay our freelance sales agents with the same platforms. Our bank account numbers will be made available on our website and promotional materials.

Any agent who intends paying with cash will be directed to deposit the money into our corporate account and then present their payment tellers to us.

13. Startup Expenditure (Budget)

From our market survey and feasibility studies , we have been able to come up with a detailed budget on achieving our aim of establishing a standard student accommodation rental company in Cape Town – South Africa and here are the key areas where we will spend our start – up capital;

• The total fee for incorporating the business in South Africa – Name reservation application costs R50 and company registration R125
• The budget for permits and license – R1,000
• The cost for hiring Consultant – R2,500
• The cost for computer software apps (Accounting Software, Payroll Software, CRM Software, Microsoft Office, QuickBooks Pro, drug interaction software, Physician Desk Reference software) – R7,000
• The budget for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – R5,400.
• Cost of payment of rent for a suitable office facility in Cape Town for 12 months at R1.76 per square feet in the total amount of – R65,600.
• The cost for office remodeling (construction of racks and shelves) – R7,000.
• The cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – R15,000
• Other start-up expenses including stationery and phone and utility deposits ( R2,500 ).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – R30,000
• The cost of launching our official website – R600
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – R5,000

Going by the report from the market research and feasibility studies conducted, we will need over one hundred and fifty thousand ( R150,000 ) South African Rand to successfully set up a small scale but standard student accommodation rental company in Cape Town – South Africa.

Generating Startup Capital for R. Oliver Tambo & Co® Real Estate Agency, LLP

Oliver Tambo & Co® Real Estate Agency, LLP. is a business that will be owned and managed by Rowland Oliver Tambo, Sean Mbeki and Sarah Zuma. They are the sole financiers of the business which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.

These are the areas we intend generating our startup capital;

• Generate part of the startup capital from personal savings and sale of his stocks
• Generate part of the startup capital from friends and other extended family members
• Generate a larger chunk of the startup capital from the bank

N.B: We have been able to generate about R50,000 ( Personal savings R30,000 and soft loan from family members R20,000 ) and we are at the final stages of obtaining a loan facility of R100,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all these factors are missing from a business, then it won’t be too long before the business closes shop.

One of our major goals of starting R. Oliver Tambo & Co® Real Estate Agency, LLP is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to rent out standard, and secured student accommodations a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.

Oliver Tambo & Co® Real Estate Agency, LLP will make sure that the right foundation, structures and processes are put in place to ensure that our staff are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check: Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts in various banks in South Africa: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Renting of Office Facility and remodeling the facility in Cape Town – South Africa: Completed
• Conducting Feasibility Studies: Completed
• Generating capital from the CEO and Business Partners: Completed
• Applications for Loan from our Bankers: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the needed furniture, office equipment, electronic appliances and facility facelift: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress

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South Africa Student Housing Business Plan

Looking to open a student accommodation rental agency in South Africa?  here is a complete Feasibility Study Example of a Student Placement Business Plan Template that you can use for FREE   .

Ok, so we’ve covered all the requirements for starting a student residence rental agency. We also took it a step further by analyzing and writing a sample student placement marketing plan template backed by actionable guerrilla marketing ideas for student housing rental agencies. So let’s move on to the business planning section.

Why start a student accommodation business?

The real estate business is a very large industry and new businesses start to come in from time to time. There is a wide range of high-turnover businesses that a budding entrepreneur who wants to start a real estate business can start successfully. One of these businesses is the rental of student accommodation.

This business requires minimal start-up capital and minimal manpower and can be started from a home office, especially if you’re not going to be fundraising to develop properties on your own.

If you decide to start a student placement business, you need to write your own business plan. The essence of writing a business plan before you start a business is that you have a plan for how you are going to set up, manage, and grow your business.

Below is a sample student housing corporate business plan template to help you write yours successfully with little to no stress.

Sample South Africa Student Housing Business Plan Template

• Industry overview

The student housing industry is a real estate business, and the real estate industry is one of the many sectors that has contributed significantly to economic growth in many countries around the world. In fact, a real estate agent can become a millionaire overnight from a single real estate transaction; Not surprisingly, the industry is responsible for the many instant millionaires making money in South Africa as well as the rest of the world.

The Bureau of Labor Statistics forecasts 11.1% employment growth for realtors in 2012 and 2022, about as fast as average. During this time, 38,000 additional jobs will be opened.

South Africa attracts a large number of international students, and a recent study by Jones Lang LaSalle (JLL) found that the number of young people between the ages of 18 and 25 will increase to nearly 100 million by 2021, and that demand for new housing will exceed 500,000 seats over the next five years.

The current housing environment can accommodate less than one in five students applying for residency, and the number of students is increasing every year as more and more young people graduate from high school.

The real estate agency (brokerage firm) usually receives a payment, known as a commission, to successfully match the seller’s property with the buyer’s real estate needs so that a sale or lease / lease can be made. In most cases, the commission received is distributed among other brokers or real estate agents who have played a role in ensuring that the property is sold or rented as appropriate.

It is important to note that in Southern Africa each province has its own unique laws which clearly define the types of relationships that may exist between real estate agencies (professionals) and owners (clients). However, this is still a victory for real estate agencies and property owners, as real estate brokers and their sellers (usually referred to as real estate agents or brokers) generally help sellers sell their property and sell it for the best possible price. conditions.

The real estate industry is highly regulated in South Africa and anyone who aspires to become a real estate agent or set up a real estate agency must apply for and obtain a license before they can legally receive compensation for services provided as a real estate agency or broker. immovable. But as a lawyer, you can do real estate transactions in South Africa and earn commissions without working as a licensed real estate agent.

The practice is for a licensed real estate agent to disclose to potential buyers and sellers the nature of their relationship with the transaction and with the parties to the transaction. Most student housing rental companies have a practice of participating in other forms of rent related to real estate. Some even go so far as to build.

Providing services to a student accommodation rental company is simple and straightforward, especially if they are not participating in other free services as part of their business.

A brief description of the student accommodation business plan

Oliver Tambo Co® Real Estate Agency, LLP is a real estate agency that will operate in all provinces of South Africa, but headquartered in Cape Town, near the University of Cape Town, which is the oldest university with the most large number of registrations in South Africa.

We intend to become specialists in the ownership, development, acquisition, management, sale and rental / rental of student accommodation, office apartments and halls, generally described as clean and safe housing close to campus at an affordable cost, and In our experience, the most stable demand is for newly built and used high-tech one and three-room apartments. security, parking and good access to shops and other amenities as well as to the campus.

Our goal as a real estate agency is to become one of the top 5 real estate companies in general. South Africa, and rent and manage property on college campuses in South Africa.

Oliver Tambo Co® real estate agency, LLP, will strive to maintain a diverse portfolio of high quality student apartments, office structures and halls. We will also focus on providing a vibrant, active and dynamic work environment for all of our employees, such as preferred rentals for all of our students and tutors, and a mouthwatering bonus for every transaction one of our employees makes.

Oliver Tambo Co® Real Estate Agency LLP will become an independent investment trust (REIT). We will handle a wide range of student accommodation rental services. We will strive to become one of the largest student accommodation rental companies in South Africa.

As part of our plans to make our customers the number one priority and become one of the leading student rental companies in South Africa, we have developed plans to introduce international best practices to compete with the best. in industry. Oliver Tambo Co® real estate agency, LLP has developed overtime plans to help us become a specialist in our field.

Oliver Tambo Co® real estate agency, LLP, will always demonstrate its commitment to sustainability, both individually and as a business, through active participation in our communities and through the integration, where possible, of practices sustainable business. We will deliver on our responsibility to the highest standards by accurately and completely meeting the needs of our customers.

Oliver Tambo Co®, LLP is a real estate agency founded by Rowland Oliver Tambo, Sean Mbeki and Sarah Zuma. They are the company’s main financiers. R. Oliver Tambo is President and Chief Executive Officer of the Company. Rowland Oliver Tambo has over 10 years of real estate experience in leadership roles in sales, marketing, emerging technologies and franchise management.

• Our products and services   >

Real estate agency Oliver Tambo Co®, LLP plans to offer a variety of real estate services in South Africa.Our intention to found our student housing company is to compete with the major players in the student housing industry in South Africa. South.

We are well prepared to take advantage of the industry and will do whatever is legally permitted in South Africa to achieve our business goals and objectives. Our commercial offers are listed below:

• Rental of student accommodation facilities in a single block
• Rental of student accommodation structures in two to four divisions
• Rental of student accommodation structures with 5 to 9 units
• rental of student accommodation facilities from 10 to 20
• rental of student accommodation structures from 20 to 49
• Rent for 50 or more student accommodation
• Rental of ready-to-use student residences, mobile homes or trailers
• Real estate advisory and consultancy services

Our vision is to become one of the 5 largest student housing rental companies in South Africa within the first 10 years of founding R. Oliver Tambo Co® Real Estate Agency, LLP.

• Our mission statement

Our mission is to start a student housing business – to grow the business. outside the city we are in We are on the cusp of becoming a national and international brand by opening offices in key cities in South Africa and in franchising.

• Our corporate structure

The structure of our business is practically no different from what you can get in the real estate industry. We have decided to create a structure that will facilitate the easy growth of our business and we have created platforms that will allow us to attract the best hands in the industry.

We fully understand that the success of any business is at the heart of the business, so we decided to set up our student housing company on the right business basis. We will ensure that we only hire people who are qualified, honest, hardworking, customer-focused and willing to work to help us build a successful business that benefits all stakeholders.

In fact, the profit sharing arrangement will be available to all of our senior executives and will be based on their results for five years or more, depending on how quickly we achieve our goal.

Oliver Tambo Co® Real Estate Agency, LLP is aware of the modus operandi of leasing student accommodation, therefore adequate terms and competitive offers have been prepared for independent real estate agents. Our marketing department will be responsible for managing this aspect of our business.

Here is the structure of the company that we will build R. Real estate agency Oliver Tambo Co®, LLP on;

• General manager
• lawyer / company secretary

Administrator and HR manager

Real estate agents

• Business Developer / Ventes & Marketing
• Customer Service Manager / Front Desk Agent

Roles and responsibilities

Managing Director – CEO (Chairman):

• Improves management efficiency by recruiting, selecting, targeting, training, coaching, consulting and disciplining managers; transfer values, strategies and goals; distribution of responsibilities; planning, monitoring and evaluation of work results; develop incentives; development of the conditions for disseminating information and opinions
• Responsible for pricing and signing trade agreements
• Responsible for providing advice to the company
• Creates, communicates and implements the vision, mission and general direction of the organization, that is, the leadership in the development and implementation of the overall strategy of the organization.
• Responsible for signing checks and documents on behalf of the company
• The organization measures success

lawyer / secretary / company legal adviser

• responsible for drafting contracts and other legal documents for the company
• Advise and manage all corporate legal processes (e.g. intellectual property, mergers, financial / securities offers, compliance issues, transactions, agreements, litigation and patents, etc.)
• Develops company policy and position on legal issues
• Find, predict and protect the company from legal risks
• represents the company in litigation (administrative advice, litigation, etc.)
• participates in negotiations on commercial transactions and writes meeting minutes
• Responsible for analyzing legal documents on behalf of the company
• Prepares annual reports for the company
• Responsible for the proper execution of personnel and administrative tasks in the organization.
• Develops job descriptions using KPIs to manage client performance
• Meet regularly with key stakeholders to test the effectiveness of HR policies, procedures and processes
• Support Chec Royal Stocks office supplies; place and expedite orders; evaluation of new products.
• Ensures the operation of equipment by meeting preventive maintenance requirements; call for repair.
• Identifies the jobs to be recruited and manages the interview process
• Carry out the inductions of new team members
• Responsible for training, evaluation and evaluation of employees
• Responsible for organizing trips, meetings and appointments
• Monitors the proper functioning of the office
• Responsible for renting and letting student accommodation and other property on our list
• Responsible for the verification and reporting of the structural performance of the building
• Evaluates building system components (electrical, fire, roofing and plumbing)
• Evaluates compliance with building, electrical, plumbing and fire codes.
• Evaluates construction plans and permits
• Review and approve plans in accordance with building codes, local ordinances and zoning regulations
• Maintains daily logs including photos taken during the inspection

Marketing and Sales Manager / Business Developer

• Identifies, prioritizes and contacts new partners, as well as business opportunities, etc.
• Identifies development opportunities; monitors development and contacts; participates in the structuring and financing of projects; ensures the realization of development projects.
• Responsible for overseeing implementation, advocating for client needs and communicating with clients
• Finds and qualifies building land according to the company’s land needs; maintains a land research database; initiates discussions with the owners on the possible sale of a property
• Develops, implements and evaluates new plans to grow sales
• Documents all contacts and customer information
• company during strategic meetings
• Helps increase sales and business growth
• Responsible for the preparation of the financial statements, budgets and financial statements of the organization
• Provides managers with financial analyzes, development budgets and accounting reports; analyzes the financial feasibility of the most complex proposed projects; conducts marketing research to predict business trends and conditions.
• Responsible for financial forecasts and risk analysis.
• Maintains treasury, general ledger, and financial reports for one or more objects.
• Responsible for the development and management of financial systems and policies
• Payroll manager
• Ensures compliance with tax laws
• Manages all the financial transactions of the company
• Serves as the company’s internal auditor

Registration and customer service

• Receives visitors / customers on behalf of the organization
• Receives packages / documents for the company
• Handles email and phone requests for the organization
• Distributes mail to the organization
• ensures that all customer contacts (email, integrated hub, SMS or phone) provide the customer with a personalized customer service experience of the highest level
• Through interaction with customers over the phone, he uses every opportunity to generate customer interest in the company’s products and services.
• Handles administrative tasks assigned by the mana line. Manage efficiently and in a timely manner
• Keep an eye out for any new information on a business’s properties that are for sale to ensure that accurate and useful information is provided to customers when they request it.

SWOT analysis of the student housing business plan

If you are starting a student accommodation business in South Africa it has its share of challenges, you will have to comply with the law and also compete with many other entrepreneurs in the real estate value chain who are also interested in winning. money with housing and construction company in Cape Town – South Africa.

To compete profitably in the rental of student accommodation, we were able to hire a trusted and reliable HR consultant to help us with our SWOT analysis. Here is a summary of the results of a SWOT analysis carried out on behalf of Oliver Tambo Co®, LLP.

One of the strengths we will harness in the student housing industry is our strong relationship with student housing owners across South Africa. In addition, we have a team of experts who have cut their teeth in real estate and take care of student placement issues. Our commission structure and relationships with independent real estate agents in Cape Town and other provinces of South Africa will also be considered to our advantage.

As a newcomer to the rental of student housing arena, we might have problems competing with the big real estate agents and other student housing companies that have been in the industry for many years; this is perhaps part of our weakness.

Opportunities in real estate, especially in the form of student housing rentals The society is colossal, given the rapid growth in university enrollments in South Africa, a trend supported by very favorable demographics. We are well positioned and ready to seize any opportunity that presents itself.

Some of the threats we are likely to face as a student placement company are unfavorable government and university council policies and the global economic recession. The global economic downturn typically affects purchasing power, and the real estate industry is known to see declines in sales and profits during this time.

There is little we can do about these threats except to be optimistic that everything will continue to work for our good.

STUDENT ACCOMMODATION BUSINESS PLAN MARKET ANALYSIS

• Market trends

Market trends in the range of business student accommodation in South Africa are such that international students are being targeted because they are willing to pay more for safe and decent student accommodation. In fact, security is a key factor when it comes to renting a student apartment in South Africa, and next to security, proximity to campus.

Another obvious trend for student rental companies in South Africa is that most of them are improvising trying to find more money to make money in real estate, and in fact they are taking action. also as developers and real estate agents. home among many other features.

One thing is that this is a must have for any student rental business; if they are hardworking, creative and proactive, they will always earn enough income to cover all of their general and operating expenses, support their business without any difficulty and make a reasonable profit on their business transactions.

• Our target market

As a student housing company, our target market covers different classes and cultures, we are entering the student housing sector with a business concept that will allow us to work with local and international students interested in renting student apartments. at an affordable price.

• Our competitive advantage

Having knowledgeable and reliable real estate agents within our payroll, business process, corporate financial structure, high quality asset portfolio management, superior financial debt management and, of course, our pricing model are all part of our competitive advantage.

Another possible competitive strategy to win over our competition in this particular industry is to build a strong customer base and keep our student apartments on trend. Our organization is well positioned, the key members of our team are very reliable and knowledgeable and can compete favorably with some of the best in the student housing industry.

Finally, our employees will be well taken care of and their benefits will be one of the best in our class in the industry. This will allow them to be more than ready to build a business with us and help them achieve their goals and objectives. We will also hire independent marketers to help us market our services.

Student housing business plan SALES AND MARKETING STRATEGY

We are very aware of the competition going on in the South African student accommodation rental market, so we have been able to hire some of the best business developers to handle our sales and marketing.

Our sales and marketing team will be recruited on the basis of their vast experience in the industry and will be regularly trained to achieve their goals and the overall objective of the organization. Training is not limited only to our full time employees, but also to all of our independent brokers who are scattered across the South African campus.

Our aim is to become one of the leading student accommodation rental companies in South Africa which is why we have strategized to help us take advantage of the market and become a major force in the industry.

Oliver Tambo Co® Real Estate Agency, LLP is prepared to use the following marketing and sales strategies:

• Introduce our student accommodation rental company by sending cover letters along with your brochure to students and other interested parties across the city where our business is located.
• Print flyers (list of rental areas) and business cards and place them strategically in offices, car parks, libraries, public places and stations, etc.
• Call on your friends and family to promote our company
• Post information about our business and the services we offer on message boards in places such as parking lots, schools, libraries and local cafes, etc.
• Promote our business and the services we offer in the newspaper or local publications.
• Use advertising networks such as agencies that will attract clients (students) who will need our student apartments
• Promote our student space rental company in real estate magazines, newspapers, TV and radio stations.
• Attend exhibitions, seminars and corporate real estate fairs. etc. to promote our services
• Implement a direct marketing approach
• Encourage the use of word of mouth advertising from loyal and satisfied customers
• Join local chambers of commerce and industry to market our products and services.

Source of income

Oliver Tambo Co®, LLP is a real estate agency founded with the aim of maximizing return on investment in student housing. Here are the sources that we will study to generate income for R. Real Estate Agency Oliver Tambo Co®, LLP;

• Rental of student accommodation facilities from 10 to 20
• Rental of student accommodation structures from 20 to 49 years old

Sales forecasts

It is known that as long as there are students on campuses in South Africa, they will still have to use the services of student accommodation companies from time to time.

We are well positioned to meet the challenges that are synonymous with the student housing sector in South Africa, and we are quite optimistic that we will achieve our goal of making enough profit in our first month of operation and expanding the activity outside Cape Town in record time. other provinces of South Africa.

We were able to critically examine We are a student housing rental company, we analyzed our chances in the industry and were able to make the following sales forecasts. Sales forecasts are based on locally collected information and certain assumptions inherent in similar startups in Cape Town – South Africa;

• First financial year:   200,000 rubles.
• Second financial year:   500,000 RUB
• Third financial year:   800,000 rubles

Note   . This forecast has been made based on what is available in the industry and assuming there will be no major economic downturn and no major competitors offering the same services as us on the site, we have a strong commercial presence. Please note that the above forecasts may be lower and at the same time higher as some factors are beyond our control.

• Our pricing strategy

It is part of our business strategy to ensure that we operate within the budget of our potential clients to help them meet their expectations. In most countries of the world, real estate appraisal by professionals is practiced according to the territory in which the object is located, the type of object and other factors.

As we do not directly control the prices of the Real Estate System, we can only respect what is available when it comes to setting the price of our premises. But one thing is for sure, we will make sure to provide decent and safe housing when we commit to doing so.

Finally, we will ensure that our fees are below the market average for all of our clients, keeping our overhead costs low. In addition, we will also offer special discounts to our customers from time to time, especially if they refer customers to us.

• payment methods

At R. Oliver Tambo Co® Real Estate, LLP our payment policy is inclusive, as we are well aware that different people prefer different payment options that are suitable for them, but at the same time we do not accept cash payments because of the volume. cash that will be involved in most of our transactions.

Real estate transactions usually involve a huge amount of money. Below are the payment options that R. Oliver Tambo Co® Real Estate Agency, LLP will provide to its clients;

• Payment by bank transfer
• Internet bank transfer payment
• Payment by check
• Payment by bank check

Keeping the above in mind, we have selected banking platforms that will help us achieve our projects without any difficulty, and we will also pay our independent sellers with the same platforms. Our bank account numbers will be available on our website and in promotional materials.

Any agent who intends to pay in cash will be asked to deposit money into our corporate account and then present their cash register to us.

Student placement business plan for ad placement and advertising strategy

We were able to work with our consultants to help us define advertising and advertising strategies that will help us penetrate the very heart of our target market. We intend to take the student housing industry by storm, so we have taken steps to advertise and promote our business.

Below are the platforms we intend to use to promote and advertise our student accommodation. rental company;

• place advertisements on print and electronic media platforms
• maximize our company website to promote our business
• use social and online media platforms such as; Instagram, Facebook, Twitter, LinkedIn, Google+ and other platforms (online real estate forums) to promote our business and list our properties for sale and rent.
• Install our notice boards in strategic locations in and around the university. community in Cape Town
• Distribute our leaflets and flyers from time to time in targeted areas
• Attend student association meetings to network and represent our company.
• Make sure all of our employees wear our branded t-shirts and that all of our vehicles carry our company logo

Business plan for student placement, financial projections and costs

From our market research and feasibility studies we were able to set a detailed budget to meet our goal of setting up a standard student accommodation rental company in Cape Town – South Africa, and these are the key areas where we will spend seed money;

• General costs for registering a business in South Africa. The cost of the  R50  name reservation request   and  R125  company registration
• Budget for permits and licenses –   1000 rubles
• Cost of hiring the consultant –   500 R2
• Cost of computer software applications (accounting software, payroll software, CRM software, Microsoft Office, QuickBooks Pro, drug interaction software, physician’s office reference software)   7000   RUB
• Insurance coverage budget (civil liability, employee compensation and property damage) for a total premium of   5,400   RUB   .
• The cost of renting a suitable office space in Cape Town for 12 months is 1.76 RUB. per square foot for a total amount of   65,600 rubles.
• The cost of reconstruction of offices (construction of racks and shelves) –   7,000 rubles.
• Expenses for office equipment (computers, printers, fax machines, furniture, telephones, filing cabinets, security gadgets, electronics, etc.)   15,000 rubles.
• Other start-up expenses, including office, telephone, and utility bills (   R2 500   ).
• Operating expenses for the first 3 months (salaries of employees, payment of bills, etc.) –   30,000 rubles.
• The cost of launching our official website is   600 rubles.
• Additional costs (business cards, signs, advertisements and promotions, etc.)   5,000 rubles.

According to the market study and feasibility report, we need over one hundred and fifty thousand (   R 150,000   ) South African rand to successfully set up a small but standard student accommodation rental company in Cape Town – South Africa.

creation of start-up capital for   R. Real estate agency Oliver Tambo Co®, TOO

Oliver Tambo Co® real estate agency, TOO. it is a business that will be owned and operated by Rowland Oliver Tambo, Sean Mbeki and Sarah Zuma. They are the only financiers in the business, so they decided to limit the sources of business start-up capital to just three main sources.

These are the areas in which we intend to generate our seed capital;

• generate part of the start-up capital from personal savings and the sale of your shares
• generate start-up capital from friends and other extended family
• Create more of the bank’s start-up capital

NB:    We managed to get about   50,000 rubles   (   personal savings – 30,000 rubles and a loan on favorable terms from family members – 20,000 rubles   ), and we are in the final stages of obtaining a line credit in the amount of   100,000 rubles   with our bank. All documents and documents have been duly signed and submitted, the loan has been approved and at all times our account will now be credited.

STUDENT ACCOMMODATION BUSINESS DEVELOPMENT: A strategy for sustainable development and expansion

The future of a business depends on the number of repeat customers, the potential and competence of its employees, their investment strategy and the structure of the business. If all of these factors are missing in the business, the business will close soon.

One of our primary goals in establishing R. Oliver Tambo Co® Real Estate Agency, LLP is to build a business that will survive on its own cash flow, without using financial resources from external sources, once the business will be officially launched. getting approval and winning clients means renting standard, secure student accommodation a little cheaper than the market can offer, and we’re prepared to survive on lower margins for a while.

Oliver Tambo Co® Real Estate Agency, LLP will ensure that the right foundations, structures and processes are in place to ensure a good perception of our employees. Our corporate culture aims to take our business to the next level and the training and retraining of our workforce is at the top.

We know that if this is done we can be successful in recruiting and keeping the best hands we can get in the industry; they will be more committed to helping us build our dream business.

Checklist / checklist

• Company name availability check:   complete
• Business registration:   complete
• Opening of corporate bank accounts with various banks in South Africa:   completed
• Launch of online payment platforms:   complete
• Application and obtaining of the tax identification number:   in progress
• Business license and permit application:   Completed
• Purchasing business insurance:   complete
• Office rental and renovation in Cape Town – South Africa:   Completed
• Feasibility studies:   Completed
• Raising capital from CEO and business partners:   completed
• Loan requests from our bankers:   in progress
• Planning of activities   :   Completed
• Compilation of employee handbook:   complete
• Drafting of contractual documents and other relevant legal documents:   in development
• Creation of the company logo:   finished
• Advertising printing:   finished
• Recruitment   in progress
• Purchase of necessary furniture, office equipment, electronics and repair tools:   In progress
• Creation of an official website for the company:   In progress
• Strengthen the notoriety of companies (Business PR):   in development
• Labor protection and fire safety conditions:   developing

Anna Cornet - Author

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How To Start A Student Accommodation Business In South Africa

Even though most universities provide accommodation for the student, unfortunately, some universities lack the capability of providing accommodation for all students who gain entrance into the university, allowing private entities to create student accommodation near tertiary institutions.

Moreover, suppose you have plans of setting up a student accommodation business but don’t know how to start. In that case, you find yourself reading the right article that aims to educate our readers on how to start a student accommodation business in South Africa.

So we encourage you to keep reading because all the needed information you have been seeking on how you can start a student accommodation business in South Africa is detailedly discussed below in this article.

The student accommodation business operates in many ways, and some include:

1. Renting To Rent : This is when an investor rent a house and later rent it out to students, so here the Investor becomes the second house owner who receives rent payment from students and pays the house owner the agreed rent cost for a commission

2. Buying To Rent : Some investors prefer buying houses near tertiary institutions to rent them out to students.

In this type of investment, the Investor only makes renovations to some Minor areas of the building to make it appear in good shape and condition to keep attracting students.

3. Building From Scratch : This is when the Investor builds the preferred type of building that suits the conditions for accommodating students

The chapters that follow are the needed information you have been seeking on how to plan, plan implementation, run and manage your student accommodation business in South Africa.

What You Need To Start A Student Accommodation Business In South Africa

The lists below are some of the basic requirements that have to be met before commencing your student accommodation business in South Africa:

1. Business Plan : build a good and feasible business plan that is easy to implement, operate, and manage a successful student accommodation business

2. Market Research : Conduct detailed market research into the student accommodation business, get to know the right locations that suit the business, available target markets, pricing, and many other aspects of the student accommodation business

3. Target Market : you can choose between rich students and average students. The kind of structure you raise and services you render will determine the kind of students that can afford your services

4. Location : always choose a location that is closer to a tertiary institution for students to have easy access to campus facilities and to cut down the stress of making physical contact with campus

5. Leasing Property : find land at the chosen location to establish your student accommodation business, and contact the landowner to negotiate on buying the land.

After agreeing on the land cost, make a deposit equivalent to the agreed land cost into the land owner’s account and request for documents in your details to stand as proof of legally acquiring the land.

6. Zoning : contact the local municipality in the chosen location to set up your student accommodation business for zoning.

Your land must be zoned to ensure that the chosen location is suitable for the student accommodation business.

7. Raising of Structure : after successful zoning of your land, raise the structure as planned and ensure that the kind of structure you raise suits the student accommodation business

8. Business Name : choose a catchy and memorable business name for your student accommodation business for an easy recommendation of your services to friends and potential customers

9. Business Registration : register your student accommodation business with the Companies and Intellectual Property Commission (CIPC) to attain the documents and certification required to operate a legal business in South Africa.

To register your student accommodation business for tax, reach out to the South African Revenue Service (SARS)

10. Advertisement : fliers, local newspapers, and online are some of the available advertising platforms you can sell your student accommodation business to students in South Africa

How Much Does It Cost To Start A Student Accommodation Business In South Africa

The cost involved in setting up a student accommodation business in South Africa varies depending on the type of student accommodation business you intend to operate.

Operating a rent-to-rent student accommodation business doesn’t cost much compared to buying to rent or building from scratch.

So, your choice of student accommodation business you intend to operate will determine the amount of capital that will go into planning, implementing, running, and managing your business.

Is The Student Accommodation Business Profitable In South Africa

The student accommodation business generates higher cash flow than the other form of property investment. Therefore, choosing the student accommodation Business path is the right choice of a business that can generate a 100% return on investment in an academic year.

Best Places To Start A Student Accommodation Business In South Africa

The best place to set up a student accommodation business in South Africa are areas near tertiary institutions. The choice of location must not be far from the institutions to help ease the stress of going a long way before entry into the campus.

So always choose locations near the tertiary institutions, which will help students have easy access to campus facilities.

How To Make A Student Accommodation Business Successful In South Africa

The following are some of the factors that have to be considered to help run a successful student accommodation business in South Africa:

1. Affordable pricing

2. Keeping structure in good condition

3. Keeping an eye on students to ensure that everything is in shape

4. Provide rooms with bed, study table, and Wi-Fi

Challenges In The Student Accommodation Business In South Africa

Below are some of the challenges facing the student accommodation business in South Africa:

1. There is high competition in the business

2. Difficulties in finding a good location for student accommodation business

3. Pricing challenges

Benefits Of Setting Up A Student Accommodation Business In South Africa

The lists below are some of the benefits of setting up a student accommodation business in South Africa:

1. Student accommodation businesses generate income for the government through taxation

2. Investors benefit from the overwhelming financial profit that comes with the student accommodation business

3. The student accommodation business has supported the educational sector

4. It creates more accommodation space for tertiary students

That is the information we can provide on how to start a student accommodation business in South Africa.

This simple and easy article Was Last Updated on December 6, 2022 by Editorial Team

Please you wish to visit this post “https://thebusinessalert.com/how-to-start-a-student-accommodation-business-in-south-africa/” ocassionally for changes and updates that we will make to this article.

Check this ultimate guide: https://thebusinessalert.com/sunlearn-student-portal-login/

In the year 2022, we bring you the best of banking and money transfer experience. Just stay tuned for more articles.

Check this ultimate guide: https://thebusinessalert.com/irs-code-290/

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How to start a student accommodation business in South Africa

• April 1, 2021

Renting out to students is one of the best ways to make money within the property business. It also guarantees a steady stream of income. This is a guide on how to start a student accommodation business in South Africa.

There are multiple tertiary institutions in South Africa, they draw out people from all corners of the country. Universities usually provide students with accommodation commonly known as “res”. However, these facilities can’t’ accommodate all students, some students need to rent somewhere else closer to the school.

This creates a demand for a student accommodation business whereby the entrepreneur buys a house and flips it into a student accommodation. Students are often more than willing to pay as most student accommodations are situated within a walking distance or just a few kilometres from the school.

The barriers to entry are a bit high and you need to have more than one student accommodation before you see significant returns. Student accommodations will always have tenants, even when the competition is tight.

Choose the right location

A student accommodation should not be far from the school that the students will be attending. Try your best to situate it within a few kilometres and 3 kilometres being the maximum. But it’s best to be within a walking distance of 15 minutes. Th closer you are; the better.

This will work for any medium to large tertiary institution; including TVET colleges, try to assess the demand first. Student accommodations are in high demand in places like Braamfontein where there are multiple tertiary institutions.

Buy rental property

The next step is to buy the house or apartment that you are going to use as a student accommodation. You have an option to lease it then rent it to students, collect the money from students, pay your lease and keep the difference. But you will be very limited in what you can do in someone else’s property.

Try to buy the property outright, whether through or mortgage or cash, it really doesn’t matter. What matters is that you eventually buy the property. Renovate it and turn it into a student accommodation.

You will have to get rid of rooms like dining rooms and lounges, there should only be one kitchen, bedrooms and a few bathrooms. Build extra rooms outside to maximize income.

Set up the student accommodation

All rooms should ideally have a single bed, or you can just let out rooms without any beds. Some people prefer sleeping on their own beds, there should be a study table on every room and WI-FI for everyone within your premises.

The issue of electricity is a bit tricky; you can include the cost of electricity in the rental fee then buy electricity for them or let them buy it for themselves. Buying electricity for them might lead to abuse, people will turn on the heater even when they don’t need it.

Choose a business model

You can either lease out directly to students or lease to tertiary institutions, which then give the rooms to students as res. The money is much higher when you are leasing to tertiary institutions, you get paid more per room, sometimes double what you would normally charge students.

Working with tertiary institutions right off the bat can be difficult, a safe starting point would be renting out directly to students.

Market your business

Marketing a student accommodation business is not difficult at all, this is because student accommodations are naturally in demand. All you have to do is make sure that everyone in your area is aware that you offer student accommodation, you will soon get a multitude of people looking for accommodation.

See also: How to start a business in business in South Africa

This was a guide on how to start a student accommodation business in South Africa. This can be a highly profitable business when managed well. Do you have any thoughts or questions? Comment below.

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Nonhle Sithole

I just bought a house in roodepoort central and I want to make is student accommodation for southwest college. Do I have to register it in order for institutions like NFSAS to pay direct for students, and how?

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How To Start A Student Accomodation Business In South Africa 

One of the best methods to earn money in the real estate industry is by renting to students. Additionally, it ensures a consistent flow of income.

In South Africa, there are numerous higher schools that draw students from all around the nation. Typically, universities offer students residences, or “res,” as they are generally known. All students, however, cannot be accommodated in these facilities; some students must rent housing closer to the institution.

This increases the need for a business when an entrepreneur purchases a home and converts it into student housing. Because most student housing is located within walking distance of or just a few kilometers from the school, students are frequently more than ready to pay.

Pick the proper location

The location of a student residence should be close to the institution the residents will be attending. Do your best to locate it nearby, with 3 kilometers being the maximum. However, it’s better to be within a 15-minute walk. Better, the closer you are.

Purchase a rental home

The next step is to purchase the home or apartment that will serve as your student residence. You have the option of leasing it, renting it to students, and keeping the difference after paying your lease and renting it out again. However, what you can do on someone else’s land will be severely constrained.

Create the student housing

A single bed should ideally be in every room or you might simply rent out empty rooms. There should be a study table in every room and free WiFi for all guests, as some individuals prefer to sleep in their own beds.

Pick a business strategy. Either you lease to higher institutions who then give the rooms to students as residences, or you lease directly to students. When you lease to tertiary schools, the money is substantially higher; you often get paid twice as much per room as you would typically charge students.

Is housing for students still a wise investment? Less demand for student housing resulted from campuses being closed at the height of the pandemic, but that is all changing as students are starting to return to their universities. The demand is now student housing is in high demand, which presents investors with a lucrative opportunity.

Can you make money renting out apartments to student

With student housing, you’ll discover that the yield % is higher and often lasts for a longer time. Developers frequently provide 8–10% NET returns for up to five years, which is the main draw for many investors

Is there a need for student housing?

In fact, there is a huge need for student housing in the country, it is something that we have identified as a government.

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How To Start Student Accommodation Business In South Africa

What is Student accommodation?

Is a secure and professionally managed dwelling place for the accommodation of student(s) who is/are registered at an academic institution, with communal areas which include lounge/dining room, kitchen and bathroom(s); serviced and maintained daily/weekly and conducive to studying and personal wellbeing.

1.Decide On Your Strategy

First thing is to decide whether you want to buy a property or rent one. Buying a property is always the preferred way to go as you will not only benefit from your monthly income but you will also benefit in the growth in value of the property over time.

However when you are first starting out and you are not sure if you want to do student accommodation long term as a business, then a rental option might work better for you.

When you rent you need to get the owner to allow you to sub-let the property. Make sure that it is stated clearly in your lease agreement that you will be sub-letting to students. I always thought that no owner would allow this, but if the property is in a traditional student accommodation area, chances are the landlord knows this already and has rented to students before, so the answer is yes more often than not.

2.Find Your Area

This might seem obvious at first as we all know where the universities are in South Africa. However I found that the suburbs close to these major institutions Stellenbosch University, UCT, Potch, UP etc) are selling or renting at a premium. The closer to the institution the more expensive it will be.

There are however multiple other institutions that cater for more niche subjects such as arts and drama, nursing colleges or culinary schools and these are not on everyone’s minds yet they also have huge housing needs.

As an example I placed 150 students in Atlantis Industrial right next to West Coast College. Very few people are even aware that there is a college in Atlantis. That building was purchased for only R4m on an installment sale with R1m renovations and is bringing in R225000 a month! If the owner knew the value of this the price would have been much more.

3.Type Of Property

House configuration: If you want to buy a property it needs to be in a traditional format or the bank will not approve your finance application. What does this mean? If the previous owner removed the kitchen and added drywalls to make it a room, the bank will not approve the finance. It needs to have a kitchen, lounge, bathrooms and bedrooms. If you rent this is less important but the students still need a decent place to cook or to prepare meals.

As many bedrooms as possible. 8sqm a room will be suitable for a single person and 12sqm for a double. Don’t be scared to also do one or two triple or quad rooms. These are great for students with a smaller budget but make sure that you have a mix of room types as not everyone would want to share with that many people. Check that there is enough cupboard space for the amount of people sharing! More than one bathroom and en-suite doesn’t count.

You need to have more than one bathroom that is shareable by the whole house. Remember regulations…. 1 toilet for every 5 students and 1 shower for every 7. A common area. You can use the lounge and kitchen as a common area. You will need space for people to chill or a quiet area to study outside of their rooms.

The study area is not compulsory but I found that students love them especially where you have mostly sharing rooms. Check that there is enough space in the kitchen for the amount of fridges, freezers and stove tops that you would need.

4.Budgeting For Your First Property

Deposit and first month’s rent – if you are renting. Purchasing fees and deposit if you are buying. Furniture for students, these are the obvious things like, beds, mattresses, study desk and chair but also the not so obvious things like sanitary bins in the bathrooms, pots and pans, cleaning stuff etc. For this (depending on your negotiations skill) you can budget for R5500 to R6500 per student

kitchen appliances. You definitely need a big enough fridge and freezer. I prefer to get a commercial fridge (like the cooldrink fridges you see in shops) with the largest deep freezer I can find.

This caters comfortably for 25 students. The alternative that I use in very large properties is to put a bar fridge in every room and one or two large freezers in the kitchen. This helps to curb food theft or just a generally messy and stinky fridge. Lounge:

I always add a lounge suite and a table (or plastic tables depending how smart your digs is) with a TV. Depending on the Wifi setup I provide Netflix for the students or provide reduced channel DSTV.

Frequently Asked Questions (FAQs).

Is student accommodation a good investment in South Africa?

Dustan Folkus, Sales Project Manager at Engel & Völkers Developer Driven Projects, explains that for investors, buying student accommodation offers an excellent return on investment. “Annual occupancy is usually at over 97%, and both rental value and retail value increase with the passing of each year.

How much does it cost to build a student accommodation in South Africa?

Current pricing to build student housing on campus is estimated at R320 000 per bed, which can increase to R550 000 when taking land costs into account.

Is student accommodation still a good investment in South Africa?

Many investors have chosen student accommodation because of the profits it produces. When you invest in accommodation close to higher learning institutions, you will receive a higher income per square meter and you are guaranteed to have tenants year in and year out.

Why is student housing a good investment in South Africa?

Historically, student housing has transacted at yields approximately 25 – 75bps above traditional apartments. Currently, the five-year average cap rate premium is 50bps, according to CBRE. For interested investors, demand is still strong, and the fractured nature of the market offers opportunity for investment.

How do I pay for my student accommodation in South Africa?

Most universities will ask you to set up a direct debit. Accommodation costs will then come out in termly instalments. Remember your student loans can help you to cover these costs. You’ll usually be required to pay a deposit on your student accommodation, which is refunded when the contract ends.

Can I live in student accommodation if I’m not a student in South Africa?

If you’re wondering whether you can rent student housing if you’re not actually a student, the answer is “maybe.” There is no universal policy regarding non-students living in student housing.

What is meant by student accommodation in South Africa?

Student Accommodation means residential colleges, halls of residence and other residences that are operated with the primary purpose of providing accommodation to students undertaking tertiary education.

Is student housing a good business in South Africa?

Student housing investment is an excellent asset class that has proven to be resilient to economic fluctuations. It has been known as one of the stable investment opportunities. The current coronavirus pandemic and the most recent economic recession have proven this point of merit.

Will NSFAS pay for private accommodation in 2021 in South Africa?

No, NSFAS does not pay private accommodation deposits or residence deposits.

Who qualifies for NSFAS accommodation in South Africa?

Applicants with a combined household income of less than R350 000 per annum are eligible. A person having a handicap: The total annual household income shall not exceed R600,000. Students who began their studies prior to 2018 and whose annual household income is less than R122 000.

Can you make money with student accommodation in South Africa?

Student accommodation is increasingly seen as a profitable area for property investors. There are various ways to make money from student accommodation from buy-to-let and renting to local students, to investing in purpose-built blocks and special types of REITs (real estate investment trusts).

How much do student landlords make in South Africa?

John Heron of Paragon says its figures suggest student properties typically enjoy a yield premium of around 27 per cent over the market average, putting student rental yields at around 8 per cent.

When should you book student accommodation in South Africa?

When can you apply for student accommodation? It varies from university to university, but usually you can apply once you’ve accepted an offer. Some universities will allow you to apply for accommodation even if they’re your insurance option, although many will only open applications to you if they’re your firm choice.

What happens if I don’t pay student accommodation in South Africa?

Failure to pay could result in the landlord instructing bailiffs to obtain the value of the money judgment, and he warns, the judgment against them could affect their credit rating, which could affect their future financial plans, making it harder to get credit or loans.

Can you stay in student accommodation over summer in South Africa?

The simple answer is that in most cases you most certainly can stay during the summer months. If you are renting private student accommodation then you definitely can stay during this season, because the contract will still be payable on a monthly basis. Landlords of course prefer to see income during this time.

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Wanneer is die nasionale kredietwet van toepassing, how to invest in student accommodation.

At South African universities and colleges, a massive gap exists between the demand for accommodation on campuses and the available spaces in the official residences. With more and more students being accepted every year, this need for accommodation has grown. Students who cannot live in the official residences, need to find other accommodation, preferably close to campus. Luckily, there are a few options to choose from.

If you are considering investing in rental property, have you considered investing in student accommodation? This investment can be profitable, and with South Africa attracting more and more students from across the world there will never be a shortage of students who want to rent your property. So, why should you consider investing in student accommodation?

Many investors have chosen student accommodation because of the profits it produces. When you invest in accommodation close to higher learning institutions, you will receive a higher income per square meter and you are guaranteed to have tenants year in and year out. It is important to note that the demand for student accommodation is much higher than the actual supply, which is good news for investors as this leaves a gap in the market. Some of the most lucrative areas in South Africa for investors to consider include Stellenbosch, Grahamstown, Rondebosch, Cape Town and Bellville.

When it comes to student accommodation, perfection is not a necessity. Unlike a young family who wants to make a house a home, students are well aware of the fact that their accommodation is temporary and that they will be leaving for bigger and greater things once they have completed their studies. This being said, students do still expect decent living conditions along with affordability.

Another reason why investors should consider investing in student accommodation is that you will be able to raise the rent along with the market, allowing you to re-advertise your property at market-related prices. This means that the turnover is ultimately much higher.

So, what types of student accommodation can you choose between when looking to invest? There are several accommodation options, which include:

• Purpose-built student accommodation

Usually coming in the form of apartment buildings, this is one of the most popular choices among investors and students alike. As a landlord, you will most likely have a rental company that takes care of the management of the building, which means that this is the ideal hands-off way to invest in student accommodation. If you can find a flat or apartment located close to the campus or student area, you can be sure that it will be a good investment and you will always have tenants.

• Shared house

These are larger properties that have been converted into several separate bedrooms and common areas. This investment will allow you to maximise your profits and it will also improve the ease of maintaining the property as there are multiple tenants under one roof.

Now, before investing in student accommodation, there are several risks to look out for to ensure that you make the best decision and investment possible. It goes without saying that students have a bad reputation, especially in the property market – they are notorious for noise, property damage, and complete disregard for their neighbours – so, when looking at potential student tenants, it’s important to do some homework and some serious vetting. You can include clauses for immediate termination of the lease, which could allow you to evict tenants who violate the rules or of whom you receive various complaints.

Unfortunately, student tenants come with a lot of administration, So, it’s advisable to not get trapped in a long-term contract. However, this means that you could potentially have to find new tenants every year and perform credit checks, negotiations, etc. all over again. Luckily, in some cases, depending on their studies, students might stay at your property for longer than a year, which means that you will not have to go through all the trouble every single year.

No matter which type of student accommodation you choose to invest in, it will be an investment worth having. You will be guaranteed great returns on your investment and receive the assurance of never having to worry about finding a tenant again.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. (E&OE)

Fields of expertise:

Conveyancing

Bond Cancellations

2013 - High Court of South Africa

2015 – Conveyancer

1972 - High Court of South Africa

1972 - Conveyancer

Estate planning

Commercial.

Student letting guide: An investor guide to student letting

When it comes to student accommodation, perfection is not a necessity. However, location is absolutely everything .

Parents and their undergrads are constantly seeking affordable and safe accommodation off-campus, but close enough to maintain low travelling costs to- and from varsity and safe enough for the lifestyle that comes with being a student.

As it stands currently, there is a huge demand for student rentals in and around the areas of varsities and colleges. Thousands of students enrol for their tertiary learning each year and campuses only have a limited number of beds available.

Five reasons to get involved in student letting

There are hundreds of tertiary institutions nationally, ranging in size from 50 to several thousand students, each. On-campus accommodation is limited.

Multi-let properties can often generate more income per m2 than, for example; letting a home to a family of four.

In many cases the student’s parents pay the rent, which also mitigates the risk somewhat.

The temporary nature of this arrangement makes it easier to raise the rent in accordance with inflation, whereas with long-term tenants the rental tends to be lower than the area average.

The National Student Financial Aid Scheme (NSFAS ) is a government entity providing financial support to disadvantaged students. A portion of their bursary can be used for private accommodation, although the amount allocated is usually only to the value of internal university-owned/managed accommodation.

Things to keep in mind:

It is important to approach this type of investment rationally and with awareness of potential pitfalls

You must be very stringent about your vetting process. Understandably, most new students will not even know what ‘credit’ really is and won’t have a credit record or references that you can use to safeguard your income. But, on the plus side; it’s usually the parents that pay for their accommodation.

Even though the student may be 18-years old, and legally able to conclude contracts, it is strongly advisable to tie their parents in, as signatories and as liable for the terms of the lease.

Students have a reputation for noise and property damage. It is of vital importance to ensure that your lease agreement protects your investment and also the interests of you other multi-let tenants.

Make provision in the agreement for routine inspections at regular intervals.

Student accommodation generally has a higher tenant turnover than other types of rentals, which means that you may have to repeatedly do the paperwork that comes with a new lease agreement.

The groundwork - research your market and setup your investment

Analyse your surrounding market.

Who is your target market?

• Is it 1 institution or more than 1 institution?
• What is the total student number and their demographics?
• What is the portion of out-of-town students needing beds?

What is your location (distance to gate or transport route are critical)?

Will you target NSFAS- or private students?

What are the NSFAS or institution requirements for accommodation?

What kinds of properties are available and suitable for multi-lets? Are you looking at:

• sectional title units;
• large older free-standing homes to convert into digs; or
• re-purposing an office building in the central business district as student accommodation?

What are the local council requirements for accommodation (it may require re-zoning in some cases)?

What are the by-laws specific to accommodation buildings / communes / hostels?

Who are your competitors for accommodating the students?

Financial considerations

Do you have a critical mass? (it is more efficient to operate a 40-bed student residence than a 10-bed student residence)

What will your variable/operating costs be for services, security, rates & taxes, sectional title levies, water and electricity, insurance, maintenance, advertising fees and management fees?

How many beds do you need to fill to cover your fixed costs?

Student contracts are typically 10-month contracts only, can you bridge costs for the other two months?

Build your investment team

A trusted estate agent will be able to offer insights around whether students prefer a house share or a bachelor flat or a digs, and what the pros and cons of each are of each.

An attorney , specialising in property investment will guide you through the lease and the clauses that will safeguard your investment, your beloved tenants and all the other students around you.

If you intend to build up a portfolio of student apartments, you should also seriously consider appointing a professional management agent to take care of advertising, tenant screening, legally compliant leasing, deposit- and rent collection, inspections and damage prevention.

TIP: Student accommodation should typically deliver around 15% annual nett yield at 80% occupancy for a 10-month rental period.

How to fine-tune your offering

Unlike a young family who wants to make a house a home, students are well aware of the fact that their accommodation is temporary and that they will be off to conquer bigger and greater things once they have completed their studies. However, students do still expect decent living conditions along with affordability.

Here are some helpful tips

A property that offers a safe and well-lit route to campus is generally a winner. Most students don’t have cars and walk everywhere, often at night. First prize is to be close to food and entertainment as well. Secure parking for those who do have cars, bicycles or scooters is equally important.

After this undergrad’s basic impulse for food and appreciation… safety comes first. The parents signing your lease need to know that you understand this! Security gates, burglar bars and potentially even an alarm system will definitely add to the appeal (and to the value of your property).

Students need practical, hard-wearing finishes, that are easy to keep clean, for example ceramic tiles instead of carpets. They do not have time to do much housekeeping.

A high-speed internet connection with good cellphone reception will most definitely be a service that any student would appreciate.

Purpose-built student accommodation may include amenities such as on-site gyms, swimming pools, coffee shops or at least vending machines and laundry facilities.

Furnished rooms should have a comfortable bed with a good quality mattress, black-out curtains, a study desk and chair, a bookcase and a built-in cupboard.

Communal areas should have comfortable seating, a kitchen with a fridge-freezer, a stove, a microwave, a kettle and a toaster.

Practical, uncluttered bathrooms that are easy to keep clean are important.

Always identify a Plan B

Property Investment is a long-term game, the student market is changing rapidly with new entrants saturating some areas.

If the student market changes or gets oversupplied, what will the property be used for or what is your exit strategy?

TIP: At the end of the day, whether to invest in student accommodation or not, begs the same question, as whether to invest in any other property type; the answer is simple; Your own investment goals are your main consideration.

Welcome to one of the most vibrant spaces in the property game!

Now that you know about the pros and cons of student accommodation... you have done the groundwork... and you have fine-tuned your offering...

The next step in your Student Letting Investor Guide is to 'Live Well'!

Have a look at the rest of the Quick Guides in our series for 'Property 1st-Timers':

• Renting guide: A guide for tenants
• Buyers guide: Buying your 1st home ...like a pro
• Buy-to-let guide
• Property flipping guide
• Property developer guide
• Student letting guide
• Sellers guide: A guide to selling your property successfully

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Affordable student housing in South Africa: business and funding risks

Sector background and demand rationale.

Since transition, South African tertiary enrolment has increased by more than any other country in the Sub-Saharan region, at almost double the global average. The National Development Plan for Higher education focused tertiary education to the economic hubs, resulting in mass student migrations into these areas.

A Department of Higher Education and Training (DHET) Report, in 2011, highlighted the lack of capacity of affordable student housing to meet this influx of students. At the time, national residence capacity was capped at 107,000, or 1 bed for every 6 students enrolled, resulting in a direct shortage of 195,700 beds. This forced 27,000 National Student Financial Aid Scheme (NSFAS)-funded students into private accommodation, costing them considerably more than the housing allowance provided by NSFAS.

In the DHET 2016 report, bed shortages were 216,000, or 1 bed in every 7 students enrolled, with 400,000 additional beds expected to be required by 2030. What’s more, the situation in Technical and Vocational Education and Training (TVET) colleges was considerably worse with only 1 bed for every 70 students enrolled. When 100,000 NSFAS students utilized private accommodation, their financial sustainability was drastically impacted. At that point, the government only managed to provide 9,000 additional beds, while the private sector only managed 1,100 over the same period. In addition, the rise of the Fees Must Fall Movement between 2016 and 2018, pressured government into pledging free tertiary education. It is a decision that has and will continue to reduce the public funds available for student housing infrastructure development, particularly considering that almost one-third of DHET’s 2018 income came from tuition fees.

The result is a severe shortage of affordable student housing that has negative consequences on educational attainment in South Africa. The Student Housing Infrastructure Programme (SHIP), undertaken by the Development Bank of Southern Africa (DBSA) and the European Union (EU) in 2018, seeks to address this through a combined initial commitment of R6.3 billion. In 12 months, 2,000 beds have been completed, 7,000 are in production and an additional 20,000 are in various stages of project development. The student housing shortage provides an opportunity for investors to finance scaled capacity, through SHIP or independently, to the benefit of all stakeholders.

Critical elements to consider in funding affordable student accommodation

Against the high-level demand indications above, this sector still promises great development opportunities in areas in close proximity to, or on, University- or TVET College campuses.

The critical elements to consider when assessing funding opportunities in this sector can be broken down into six focus areas:

• Land location/size , development readiness and cost, measured against the affordable student accommodation demand specifics relative to the specific location.
• Design, preparation and planning , including proper financial modelling and structuring.
• Proper allocation of delivery risk , at affordable building rates, utilizing potentially alternative or supplementary building systems.
• On-time and in budget completion , with simultaneous accreditation to the target institutions.
• Off-take confirmation , ideally based on head lease arrangements with target institutions or ensuring project viability based on applicable NSFAS accommodation price per bed applicable to the target institution.
• Post completion property and facility management risk to be properly allocated to proven and experienced operators.

The location of the land parcel to be developed needs to be within easy reach of the institution to be served. Ideally, within 500m. The regulated distance in terms of the Gazetted Minimum Norms and Standards is no more than 20Km, with the proviso that safe and secure transport at regular intervals needs to be provided by the service provider if the establishment is more than 5Km away from the said institution.

Land price levels are a function of the per bed accommodation rates for the particular development area and the promoter/developer’s development cost structure. The aim is to acquire the land, on average and readily zoned, at less than R25,000-00 (2019) per bed dependent also on whether bulk services are already paid for or not.

Design preparation and planning: feasibility phase

It stands to reason that the success, or potential failure, of any Student Housing project does have a direct relationship to proper pre-development preparation and planning. It starts with a design process integrated with the DHET’s minimum norms and standards, as amended from time to time, and ends with a properly modelled technical and commercially viable feasibility study. Including a proper business structure and promoter/funder acceptable funding structure.

Each Institute of learning also has its own unique criteria to adhere to and to ensure eventual accreditation as a private student accommodation facility serving that particular institution. Hence the importance of proper stakeholder engagement in the planning and design phases and an integrated design and planning approach. This should include property and facilities management expertise and guidance.

Delivery risk allocation

This essential stage in project execution needs to be de-risked adequately to ensure comfort to the funders of any proposed student accommodation development project. For this reason, the developer and its team of professionals and eventual contractor / sub-contractors need to be adequately experienced relative to the complexity of the project under development.

A full continuum of contracting structures can be utilized; from a full EPC type construction and delivery structure to a developer own and built structure, using multiple sub-contractors under strong and experienced construction and development management expertise.

“This essential stage in project execution needs to be de-risked adequately to ensure comfort to the funders of any proposed student accommodation development project.”

As the design criteria are fairly fixed, the cost structures of development execution (excluding zoned land price) are largely driven by:

• Soil conditions, access, egress and land topography;
• Design efficiencies;
• All material and FF&E procurement sources and methodologies;
• Site location;
• Building technologies being utilized in the construction execution;
• Reasonable professional fees being quoted;
• Reasonable development and other management fees being allocated to these projects;
• Negotiated funding costs, interest rates, fees etc.

Finally, proper, acceptable and reasonable delivery guarantee and legal structures need to be negotiated to assist in ensuring unambiguous execution and final delivery of any particular project.

On-time completion / accreditation

As a result of the market for which these units/beds are typically developed, the on-time completion prior to the start of any new academic year is of utmost importance. This ensures maximum occupancy at the start of each academic year, a direct bearing on project financial success.

With proper stakeholder involvement throughout the delivery period, and more focused towards completion, private student accommodation suppliers in the affordable end of the market can smooth the process in obtaining accreditation once occupancy certificates are formally issued by the local authorities. This will assist in optimizing the risk and return requirements of both funder and promoter/developer.

Off-take confirmation

From a funding perspective, the more secure the off-take (term revenue signed-up and supported by creditworthy institutions) the less risky and the easier to fund. In the affordable Private Student Accommodation market in South Africa, the off takes can cover a range of different options. It varies directly in terms of the needs, urgency and requirements of each individual institute of learning.

Some institutions are willing to sign term (and head lease) agreements on completed and accredited facilities, from triple net lease arrangements to fully owner-managed facilities. In the metropolitan areas with a more competing rental environment, the general strategy seems to be a student and NSFAS-based individual lease agreement strategy, with market demand and proper integration with NFSAS systemized accommodation allocation per bursary student being the main method in alleviating the risk of non-payment.

“From a funding perspective, the more secure the off-take (term revenue signed-up and supported by creditworthy institutions) the less risky and the easier to fund.”

The NFSAS and Institutional systems integration and cooperation are improving each year. Electronic and smart card access to bursary funds to accredited service providers is the current methodology being applied. Any private developer of affordable student accommodation should fully understand the mechanics of these systems to ensure adherence to the overall criteria and hence cover the non-payment risk inherent in the supply of any student accommodation. This covers the off-take risk based on pure market demand to a large extend.

Post completion property and facility management risk

The affordable student accommodation market is highly mobile. All units are furnished, hence the ability of students to move from one service provider to another is seamless.

To protect occupancy (revenue) and risk of funding defaults the promoter/owner needs to ensure proper and hands-on property and facilities management services to completed projects, on a qualitative and sustainable basis. Apart from the various specialist property management companies operating in the field, many developers do have their own internal service providers in this space.

An important part of funder criteria hinges on the expertise of proven property management expertise behind any student accommodation facility, also in the affordable market space. These need to be properly integrated, as an accredited private student accommodation facility, with the particular institution’s student code of conduct rules and regulations. Most institutions actually maintain control over the student wellbeing through its codes of conduct, at all the accredited accommodation providers. Regular inspection of the facilities by the various institution’s designated offices are part of the accreditation confirmation throughout the life cycle of the facility.

There is clearly a huge and growing demand for Affordable Student Bed Accommodation in South Africa. This demand can be addressed in an integrated fashion, driven by the NSFAS Bursary policy and its efficient execution in the years to come.

Any developer in this market needs to take cognisance of the various regulatory requirements applied to this sector. Furthermore, it is important to understand the existing national and other initiatives to address the dire need for the development of beds, for example, the SHIP being undertaken by the DBSA and EU from 2018.

It is advisable to also conduct a proper review of development plans and strategy employing specialist advisors in this space to ensure no costly errors are made during the full development process.

Author: Ben Verhoef, Director at Cresco Property Advisory & David Perrie, Associate at Cresco Group

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Market Analysis

Market Assessment: The Student Housing Landscape in South Africa

Education is key to building human capital. Expanding access to quality tertiary education and vocational education and training institutions can help reduce income inequality and promote social mobility through greater access to skills, training and jobs. One of the challenges that South Africa's formal tertiary education system faces is a shortage of high-quality, affordable student housing units. Suitable and accessible student accommodation could help more South African students take classes and succeed.

IFC, with funding support from the Swiss State Secretariat for Economic Affairs (SECO) and the UK government and technical support from JLL, produced this market assessment on the student housing landscape in South Africa to analyze current and future supply and demand for student accommodation at tertiary institutions. The study unpacks the challenges to delivering adequate and affordable student accommodation and provides recommendations to support further private and public sector collaboration to increase affordable student housing in South Africa.

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Our collective aim at Student Rez is to help investors achieve financial independence and lasting wealth through a buy-to-let property investment strategy. Whether you are a beginner or advanced investor, we aim to help you successfully manage every process you’ll face through this. Our focus remains on investing in Student accommodation real estate, where our current investors consistently achieve above-average rental income and capital growth yields.

Our property consultants will guide you on buy-to-let properties we have on offer from start to finish.

• Description of the property with inventory and any additional features (CCTV & Fingerprint access control)
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Our collective aim at Student Rez is to help investors achieve financial independence and lasting wealth through a buy-to-let property investment strategy. Whether you are a beginner or advanced investor, we aim to help you successfully manage every process you’ll face through this. Our focus remains on investing in Student accommodation real estate, where our current investors consistently achieve above-average rental income and capital growth yields. Our property consultants will guide you on buy-to-let properties we have on offer from start to finish.

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Student accommodation is a growing subsector

One of the fastest-growing segments of the property market is student accommodation.

T he University of Fort Hare is the site of a huge student housing project (above). The second phase of the student village will cost R400-million. Student accommodation specialists STAG African will create a student centre and postgraduate options, having delivered 610 beds in the first phase.

When the project is complete, the university will have the highest ratio of beds to students in South Africa, with a total of 2 047 beds. The project is jointly funded by the European Union, the National Department of Higher Education and Training and the Development Bank of Southern Africa.

STAG African is responding to a national (and continental) trend because one of the fastest-growing segments of the property market is student accommodation. Ambitions to keep making tertiary education more accessible to a broader range of students has been successful since South Africa became a democracy in 1994 and this has created a need for accommodation. The Department of Higher Education and Training estimates that there is a need across South Africa for 250 000 beds for university students.

These factors apply to the province’s other universities such as Nelson Mandela (Port Elizabeth and George), Rhodes (Grahamstown) and Walter Sisulu (four campuses including Mthatha and East London), together with all the TVET colleges.

Fort Hare University recently completed a library building in East London that also serves the students of Walter Sisulu University and UNISA. Construction company GVK-Siya Zama faced some challenges on a constricted site, but delivered basement parking and four levels of offices, boardrooms, study areas and a canteen. The library is on three levels.

The same company was active on the project to rebuild Woodridge College after that institution was devastated by fire in 2016. Another project that required the demolition of buildings was at David Livingstone High School in Port Elizabeth. This R64-million project created a new double-story classroom block, kitchen and dining hall.

Coastal properties almost always attract a premium, but a new trend towards “semigration” is further boosting prices. Semigration refers to families who live in towns like Knysna or George but the bread-winner commutes to Johannesburg. Towns such as St Francis Bay, Jeffreys Bay and Port Alfred are now becoming the sites of primary residences, instead of being exclusively holiday destinations.

A major stimulant in the housing sector is government. In 2019 the Eastern Cape Provincial Government claimed to have built 500 000 houses in the term of office of the administration that started in 2014.

A new housing development in the rural area of Keiskammahoek attracted funding of R25-million from the Eastern Cape Provincial Department of Human Settlements. Aimed at destitute families, the first phase was conducted in the settlement of Masincedane, and the project will ultimately cater to 1 255 beneficiaries.

Large-scale housing projects often demand unique lighting requirements. The Buffalo City Metropolitan Municipality called in large-area lighting specialists Maritz Electrical for the lighting of its informal settlements. The introduction of LED lighting on 20 meter masts will provide a measure of security and maximise energy efficiency.

A remarkable transformation has taken place in downtown Port Elizabeth. The old “Sanlam” building, which used to house one of the country’s most notorious security branch torturers, has been converted into social housing. Together with two other buildings (Mumford House and the Old Mill Building) the area has been named the Steve Biko precinct in honour of the Black Consciousness leader and will offer a heritage aspect in the form of a museum. The room in which Biko was tortured has been preserved as a historical site.

The Qhama Social Housing Institute offers accommodation from R1 200 per month and is targeted at the “missing middle”, people who can’t afford a bond and who don’t qualify for an RDP house. These people are entitled to a housing subsidy.

Transformative development

One of the largest malls to be constructed in South Africa in the new century has made a big impact on the western edge of Port Elizabeth. With 250 shops, an ice rink and cinemas, the R2-billion Baywest Mall is the first part of what will become the 320 ha Baywest City Precinct on the N2. The giant development spurred a R300-million upgrade at Greenacres, the city’s first big mall development which attracted shoppers away from the central business district (CBD) in 1981.

The Baakens River Valley is one of Port Elizabeth’s hidden gems and the MBDA has commissioned studies on how the valley might best be utilised for leisure and new housing without compromising its unique natural features.

A scheme to restructure the yacht basin in the harbour is planned. A key blockage is the location of manganese storage dumps on the edge of King’s Beach. When those are moved to the Port of Ngqura, the marina development can go ahead.

Online resources

• Construction Industry Development Board: www.cidb.org.za
• Mandela Bay Development Agency: www.mbda.co.za
• Qhama Social Housing Institute: www.qhama.co.za
• Social Housing Regulatory Authority. www.shra.org.za
• South African Property Owners Association: www.sapoa.org.za

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Privacy Overview

New Offering Allows South Africans to Invest in Student Accommodation and Hospitality Asset Businesses and Reduce Tax

For the first time, South Africans are now able to invest in high quality hospitality and student accommodation businesses whilst reducing their tax liability in the process.

South Africa’s largest Section 12J manager, Westbrooke Alternative Asset Management , looks after almost half of the capital invested in S12J funds in the country. Its latest offerings provide further opportunities to stimulate private investment in the SA economy and simultaneously reduce an investor’s tax liability.

Jonti Osher, fund manager at Westbrooke Alternative Asset Management explains, “If you subscribe for shares in one or a combination of our funds, you will be able to deduct your full investment against your taxable income and thus reduce the amount of tax payable at the end of February 2018.”

S12J is an investment tax incentive which was introduced by SARS to boost the economy by encouraging investment into private companies of a specific size which operate in select industries. The incentive gives individuals, companies and trusts the ability to write off 100% of the investment against their taxable income in the year they invest. Therefore, investors can benefit from up to 45% immediate tax relief, reducing the cost of the investment while providing downside protection and enhancing overall returns. However, the investment must be held for at least five years.

The S12J asset class is particularly attractive to those tax payers who have incurred capital gains tax, as the S12J deduction is available against all forms of taxable income before the close of the February tax year.

Student accommodation

Westbrooke Stac (Student Accommodation) invests alongside experienced, reputable operators which own and manage student accommodation operations situated in strategically located hotspots across South Africa including Pretoria, Johannesburg, Cape Town and Stellenbosch. The investment aims to provide an attractive dividend stream as well as capital growth in the underlying property assets on exit. Stac aims to assist government in promoting education by addressing the country’s bed shortage in key student hubs.

Cape Town decentralised hotel offering

Westbrooke Alto (Alternative Tourism) is a fully tax deductible investment into a portfolio of decentralised, residential hotel properties situated in attractive suburbs across Cape Town. Guests will book these hotel properties through the use of online reservation systems such as Airbnb, Booking.com, Tripadvisor etc. The investment aims to capture the capital growth of the hospitality property over the investment period, whilst promoting local tourism.

Rental income

In addition to the launch of the new Stac and Alto funds, Westbrooke has reopened the Westbrooke Aria (Alternative Rental Income Assets) offering, which invests in a portfolio of asset-backed rental businesses with contractual revenue streams boasting a diverse base of South African business customers. The underlying investee companies focus on providing different types of moveable assets, such as vehicles and equipment, on medium and long term operating rentals to these customers. For example, Westbrooke provides growth capital to a company that rents, services and maintains scooters used by Famous Brand franchisees.

Dino Zuccollo, fund manager at Westbrooke Alternative Asset Management says, “Our previous investors have been successful in obtaining their tax relief and the process has been seamless through the use of the SARS e-filing system. We are focused on protecting our clients’ money by investing in asset-backed investments which also fulfil the mandate to stimulate investment into the SA economy. Westbrooke focuses on risk mitigation and capital preservation through asset-backed S12J investment strategies that aim to deliver attractive risk-adjusted returns.”

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SA Student Accommodation Impact Investments

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When Eris Property Group investigated expanding our business into the student accommodation market, given the significant gaps there is, we have realised that the development pipeline is substantial, and to serve it, we needed to raise more capital. The South Africa Student Accommodation Impact Investments (SASAII) was created to add more beds to boost supply.

The investment company is targeting R2 billion in raised equity capital and has secured several commitments to date. The minimum investment amount is R50 million, and the investment company is hoping to attract the attention of fund managers and pension funds, or those investors with long-term investment horizons.

An upside for investors is that the investment company is structured so that fees are only applicable to drawn capital, rather than all capital committed, which is how traditional private equity funds work. The company is up to date with the standards and requirements of the Department of Higher Education and Training and all our developments will comply with these, ensuring investors are guaranteed peace of mind in terms of quality assurance.

SASAII is targeting a 14% internal rate of return after tax (CPI plus 8%), so we believe our Investment proposition is very attractive over the long term and will list it on a stock exchange at the appropriate time.

The time is ripe for impact investment across several sectors, and Eris Property Group is hoping to attract investors to the South Africa Student Accommodation Impact Investments SASAII to help deliver quality student housing in South Africa to fulfil the need for this form of social infrastructure.

The South Africa Student Accommodation Impact Investments (SASAII) is a way for investors to realise a financial return while contributing to social solutions that will benefit South Africa's youth as they seek to attain an education.

Eris Property Group

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NSFAS on payment of April allowances

The National Student Financial Aid Scheme (NSFAS) paid the disbursements for University and TVET college students in respect of students for the 2024 academic cycle, against valid registration records received on the 15th March 2024 for TVET colleges and the 19th March 2024 for universities.

NSFAS would like to remind all institutions that the monthly payment date for TVET college allowances is the 25th of every month, and for universities it is the 30th of every month. It is therefore important that institutions submit their registration data to be included in the initiation of payment by the respective NSFAS cut-off dates communicated.                   

In the current payment circle, NSFAS paid University allowances to the value of

R2, 306,583,222,00 in total, which is divided as follows:

• Tuition to universities – R1,258,865,972,00
• Allowances via universities  – R653,954,716,00
•  Direct payment to students – R393,762,534,00

Loading of the 2024 registration data

NSFAS has initiated the registration upload period for institutions to submit the registration data for the 2024 academic year. Upon confirmation of funding and student registration for the funded/approved qualification, institutions are strongly encouraged to promptly submit their outstanding registration data for the 2024 academic year to NSFAS.

This submission is crucial for us to process payments for tuition and allowances. Institutions and the students are reminded that all subsequent disbursements will be based solely on the registration data received and processed successfully.

At the time of generating the payment file, NSFAS did not received the registration data from the University of Fort Hare and the University of Stellenbosch.

The list below indicates the number of registration data received on March 19th after the payment file generation. Unfortunately, this registration data did not form part of the April payment file.

• University of Venda
• University of Mpumalanga
• University of Limpopo
• University of the Witwatersrand
• Sol Plaatje University
• Durban University of Technology
•  North-West University
• Vaal University of Technology
• University of Stellenbosch
• Mangosuthu University of Technology
• University of the Western Cape
• Tshwane University of Technology

TVET Colleges allowances

On the latest payment, the scheme paid TVET colleges allowances and tuition to the value of

R 511,106,120 in total, which is divided as follows:

• Tuition to colleges  - R147,115,846
• Allowances via TVET colleges – R34,831,311
• NSFAS Card Allowances- R298,971,220
• Student Accommodation via solution providers – R30,187,743

Institutions submission of registration data

The following TVET colleges have not met the 15th March 2024 cut-off date for the submission of registration data for the April payment. Unfortunately, this registration data did not form part of the payment file for the April payment of allowances.

• Lovedale TVET College
• South West Gauteng TVET College

As on the 04th April 2024, all the TVET colleges had uploaded their registration data and the only TVET college that still needs to upload its registration data is Lovedale TVET College.

NSFAS is working with the college to ensure that they finalise the process of loading the registration data.

 Student accommodation

Accommodation providers are also urged to ensure that all students in their accommodation establishments are onboarded on the myNSFAS accommodation portal. This will ensure that the registration data submitted by institutions contains this critical information which will ultimately lead to the payments of Accommodation Providers which accommodates NSFAS students.

Accommodation allowance paid comprise of the following:

• Institutional residences -  R255, 765, 764,00
• Private accommodation – R436, 732, 491,00

Total accommodation disbursement: R702, 498,255,00

NSFAS interventions on institutions not submitted registration data

NSFAS has sent its servicing administrators to work with all college and universities to finalise the submission of the registration data and to actively addressed NSFAS related challenges faced by students. The servicing administrator are currently working with all institutions which have not submitted their registration data in order for them to comply to this standard operating procedure for the payment of allowances.

Through these regular visits to campuses and the provision of assistance and support, NSFAS aims to alleviate the tensions and contribute to a harmonious academic environment for all institutions.

 UJ uploaded incorrect registration data

During the 2024 academic year registration data upload period, the University of Johannesburg (UJ) mistakenly uploaded incorrect registration data, resulting in erroneous allowances being paid out to students. Instead of uploading the correct amount of R16500.00 for the academic year 2024, the institution accidentally uploaded the R3300.00 meal allowance.

The payment of allowances is not a manual process; rather, it is system-based. The NSFAS system processed the R3300 claimed assuming it was for annual allowances, and consequently divided it by 10, representing the 10 months from February to November 2024.

The implications of the incorrect allowance payment are significant. Students who received lower allowances (R330.00 instead of R1650.00) than expected are likely to be dissatisfied. This dissatisfaction may lead to protests and a negative perception of the NSFAS direct payment process.

Rectifying the error will require efforts from UJ. Staff will need to investigate the issue, communicate with affected students, and process corrections in the system. Additionally, NSFAS will have to ensure that the adjustment platform is ready to receive corrections.

There is a reputational risk associated with this incident. The NSFAS disbursement process might come under scrutiny and be blamed for UJ's error. Negative publicity can impact NSFAS's image and erode public trust in its operations.

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