29 Oct 2012
The North West University is expanding faculties, causing a rise in the number of students in Potchefstroom - and the local property market sector that caters for the student population is expanding in similar fashion.
The engineering faculty is set to be followed by faculties in other disciplines and although the university is building a student residence and upgrading existing residences, it is unlikely it will be able to cater fully for the increasing number of students enrolling at the institution.
This is according to Jaco Faurie, who obtained the local RealNet franchise in partnership with Pierre Ludick at the beginning of September.
Student accommodation is already at a premium, a fact reflected in high unit prices. Compact, one bedroom units of 41 square metres are on the market at prices of R750 000, says Faurie.
He says there is little buyer resistance, as parents of prospective students who do not gain places in res view the units as an excellent investment and a better option than renting for the duration of their children's tertiary education.
One cannot fault their logic, he says, because rentals are also at a premium. An older, two bedroom unit selling for R665 000 will draw tenants quickly at a monthly rental of around R5 000. “An investor who paid a 20 percent deposit would thus comfortably cover his bond of about R4 600 per month and the monthly levy of around R350 with his rental income."
Faurie says investors are active in the market as they had two investors approach them in the first month after opening, wanting to invest in student accommodation after withdrawing bank deposits. They had become disappointed with low yields due to low interest rates and saw buying local student units as a better investment.
"In another case, the father of a primary school learner decided to invest now in a student unit, which he will rent out until his child attends the institution in a decade or so."
Faurie says not all parents have the means to buy units so far in advance, but he advises parents nevertheless to buy as soon as they can, rather than wait for the start of their children's tertiary education.
Parents who buy early have the luxury of scouring the market for the best deal and will earn income until the time comes when they need the unit for their own children, however, most parents only start looking around August for the following academic year, he says. "While early birds may find good deals, those who wait until the end of the academic year have fewer choices and sellers know that they will get their price because of the strong demand."
Student apartments with two bedrooms, priced at R650 000 to R800 000 are currently in highest demand, Faurie says.
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