Student accommodation in South Africa gets R150 million boost from the World Bank Group
- Students studying at South African universities and colleges are struggling to find affordable accommodation.
- The International Finance Corporation says that there is a shortfall of more than 500,000 beds and has invested R150 million in a local property group to develop more dedicated student housing units.
- Eris, which has developed commercial properties across Africa, will add this latest investment to a R500 million injection received in 2020.
- Four-bed units in Eris’ inaugural Tshwane development cost R4,640 per month, including water, electricity, and Wi-Fi.
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The International Finance Corporation (IFC), part of the World Bank Group, has invested R150 million in South Africa’s Eris Property Group which will be used to develop and operate accommodation for up to 15,000 students by 2026.
Affordable accommodation for students enrolled at South African colleges and universities is in short supply. Prior to the pandemic, the Department of Higher Education and Training (DHET) indicated a shortfall of 300,000 student beds.
Approximately 2.5 million students were enrolled across all tertiary institutions, including universities and Technical and Vocational Education and Training (TVET) colleges, in 2020. The DHET confirmed that the dedicated bed capacity could only accommodate 11% of all enrolled students, with the majority relying on living allowances from the National Student Financial Aid Scheme (NSFAS).
The NFC estimates that the current shortfall exceeds 500,000 and will grow by 40% by 2025 owing to increased enrolments and the slow rollout of government’s Student Housing Infrastructure Programme (SHIP). The DHET-led SHIP looks to provide 200,000 beds at universities and 100,000 beds at TVET colleges by 2030.
Eris, founded in 2008 as spinoff from RMB Properties, has ventured into Purpose-Built Student Accommodation (PBSA) following successful commercial developments in South Africa, Ghana, and Mauritius.
Eris’ first move into the sector was the development of a 988-bed student accommodation property, called Units on Park in Hatfield, Tshwane. The property welcomed its first students in 2020.
Shortly after the launch of Units on Park, Eris announced that its South Africa Student Accommodation Impact Investments (SASAII) programme – operated through Rise Student Living which targets NSFAS students – had successfully raised R500 million in funding. Momentum Metropolitan Life and the Eskom Pension and Provident Fund were among some of the lead investors.
The property group got another boost this week, with the IFC announcing the R150 million investment which will be used to develop other student accommodation properties.
“SASAII is targeting a 14% internal rate of return after tax, 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,” explained Eris in detailing the path to its R2 billion investment target.
The partnership also extends to the IFC’s EDGE (Excellence in Design for Greater Efficiencies) programme which certifies resource-efficient and zero carbon buildings.
"We are excited to welcome IFC as a core investor in our student accommodation platform,” noted Johan van Vuuren, the executive head of student accommodation at Eris.
“Eris has developed a high-quality product at an affordable rental level, and we look forward to executing on our substantial pipeline.”
Eris' newest Avenue Road development in Mowbray, servicing the University of Cape Town, started accepting students this year. The four-storey building, which includes a communal lounge, laundry services, landscaped courtyards, and security, can accommodate 500 students.
The Jorrisen Street development, expected to be completed in 2022, will bring new student accommodation to Braamfontein in Johannesburg. Another 184-unit development in Tshwane, Libro Studios, is also due to welcome students in 2022.
Units on Park’s most affordable option is the four-bed unit which costs R4,640 per month – or just over R1,000 per student – and its most expensive is the one-bedroom unit for R6,090 per month. Monthly rental includes electricity, water, and Wi-Fi.
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