Is it better to rent or buy student accommodation?
Here we take a look at student accommodation at The Westwood in Observatory, a development by Rawson Developers
Parents of university-aged children have plenty of expenses to budget for, not least of which is accommodation for the duration of their kids’ studies. If you’re not lucky enough to live near your child’s university of choice, you’re typically faced with three options: official university residence, renting an apartment, or buying an investment property for your child to live in.
Sadly, university residences are not only relatively expensive (starting at around R4600 per month for a small, shared room), they’re vastly oversubscribed and often provide a questionable quality of accommodation. For many parents, this makes them an unappealing option, narrowing their choices to buy vs rent.
Average Costs of Student Rentals
When it comes to student rentals, Brad Morgan from Rawson Developers, says parents in Cape Town should expect to pay anything from R7 500 to R14 000 per month for a studio or one-bedroomed apartment in a safe location relatively close to campus.
“Over the course of a 3-year degree, that can total anywhere from a quarter to half a million rand for a single child,” he says. “If you plan to send more than one of your children to university, you need to multiply that number accordingly. Two children could easily cost their parents more than a million rand on student accommodation during their tertiary education.”
Costs and Benefits of Buying a Student Apartment
For not too much more each month, Morgan says parents could invest in a brand-new studio or one-bedroomed apartment in a security development like The Westwood (currently selling in “student central” Observatory and due for completion August 2020).
“With prices starting at R1.89million, all inclusive, bond repayments could be as low as R14 590 after a 10% deposit,” he says. “That’s not much more than a lot of student rentals, and the quality of life on offer is hard to beat.”
Parents can also offset expenses by purchasing a two-bedroomed apartment and renting the extra room to one of their child’s student friends. This, together with future rental potential (with demand virtually guaranteed) and capital appreciation often topping 10%, makes it possible to not only recoup expenses, but make a very healthy profit on purchases of this type over time.
“There’s a reason investment in student accommodation has become a global trend,” says Morgan. “Demand for both sales and rentals in this area has shown strong and consistent growth.”
According to Morgan, about 50% of buyers in Rawson Developers’ recently, sold-out Observatory development, The Winchester, bought with the intention to let. All of these rental units are already successfully tenanted – many to students. Studios are getting R10 000+ per month, one-bedrooms up to R14 500 per month, and prime two-bedroomed units between R 16000 and R20 000 per month.
With this kind of potential, it’s easy to see why more and more parents are approaching their children’s student accommodation as an investment rather than an expense.
“If it were me, I’d definitely buy instead of rent if circumstances allowed,” says Morgan. “It’s not just about providing a nicer, safer, more controllable environment for your children. It’s about making a smart financial choice that will benefit your family for years to come.”