Availability of decent accommodation facilities for many South African students still remains a challenge.
The department of higher education estimates that there’s over 500 000 bed shortage throughout the country as universities are unable to provide optimal student housing due to constrained budgets. Current student housing can only accommodate approximately 18% of the total student enrolments in higher education. New developments needed to match the growing numbers of students entering tertiary education each year.
The consequences of inadequate quality housing goes far beyond a place to live while studying for these student. Research show that students that stay in quality student residence have a higher success rate than those in unconducive living environments. There are three main solutions in solving the student accommodation crisis in South Africa:
Option 1 is for universities to expand their budget to fund student housing, however this solution will not entirely solve the issue because it is economically viable for these institutions to provide accommodation for every student.
The second option is to pursue the public private partnership (PPP) model, were the university leases the building from private independent developer.
The final solution is for the private developer to build off campus student housing that will cater for the student that require a more flexible and less regulated environment. And this is where our investment opportunity exists!
5 Reasons to invest in Unlisted Real Estate Investment
Investing in real estate has always been key to wealth creation, however investing in physical property has typically been capital intensive.
That being said, they are other options to invest in real estate such as buying a stock of a publicly listed company or investing in private equity property funds that are not publicly listed.
The benefits of investing in a property funds can be summarised as follows:
#1. Passive income
Investors enjoy the benefit of earning passive consistent passive income generated from property rental income. The property managers usually takes care of rental collection and sourcing the best tenants for the building. Rental income should appreciate year-on-year by inflation plus a margin depending on demand and supply of property stock in the area. We target a Yield around 10.3%
#2. Capital appreciation
Property value usually appreciates in value over a period of time. As an investor into the crowd fund, you are also entitled to the income generated from selling the property after the holding period. Seasoned property investors usually have a holding period of between 6-10 years, however if economic conditions allow this can even be longer.
#3. High tangible value
Real estate investment are backed up by brick and mortar making it less volatile to economic shocks, unlike stocks and bonds. The underlying property is also insurable in case of any unfortunate event, therefore your capital is almost guaranteed.
#4. Inflation hedging
Landlords usually transfers inflationary pressures to the tenant, protecting your capital from being negatively affected by inflation.
Exposure in unlisted real estate can also offer diversification benefits. Unlisted property investment returns are positively uncorrelated to most asset classes such as stocks and bonds.
To understand more about this opportunity, join me this Saturday for a Student Accommodation Development Investor Roadshow.
Dates: 1st, 8th and 15th October, 11:00am – 12:30
Venue: Vunani House, 151 Katherine Str, Sandton
• Student Accommodation Crisis in South Africa
• Possible solutions to the crisis
• Investment opportunities.
Mabindu is currently raising capital to finance a student accommodation development for Vaal University. All investors with a long term view and an appetite for passive income are invited to be part of the crowd that is investing to solve a national student crisis.
Minimum investment is R50 000 per share with an annual of between yield of 9-11%.
We believe that we can provide everyone access to prime real estate deals that was only previously available to a few individuals, so join us.
Mabindu.com & Vunani Private Client