Student Housing: A smart property play for yield & growth

• South Africa faces a shortage of more than 500,000 student beds, creating sustained demand for well-located rental properties.
• Strong demand and low vacancy rates make student accommodation a high-yield buy-to-let opportunity in many university towns.
• Strategic planning before “apartment season” helps investors secure better deals and position properties for consistent rental income.

From campus to capital growth

Thousands of students have settled into their first semester at universities across South Africa. While they adjust to campus life, forward-thinking parents and property investors should already be looking ahead to the next academic cycle.

Student accommodation has emerged as one of the most resilient property investment opportunities in the country. With demand consistently exceeding supply, investors can secure steady rental income and meaningful long-term capital growth if they approach the sector strategically.

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“It may seem premature to start planning this early in the year, but with South Africa short of at least 500,000 student beds, it’s never too soon to consider investing in a suitable property either for your own child or as a buy-to-let investment,” says Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond.

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The period from March to August is particularly important for investors. It falls before the traditional “apartment season”, when students and parents begin signing leases from September onwards.
 
Retha van Rooyen Founder of My Student House and author of the book ‘Creating wealth in student accommodation in South Africa’ says for investors, this window provides valuable time to research markets, compare properties and secure an investment before demand spikes.

A market driven by demand

Student accommodation remains attractive largely because demand continues to grow faster than supply. Across South Africa’s major university hubs including Cape Town, Stellenbosch, Johannesburg, Potchefstroom and Pretoria, private housing plays a crucial role in meeting the needs of a rapidly expanding student population.

In high-demand areas, buy-to-let investors can achieve strong rental yields and solid capital appreciation. In Braamfontein, for example, rental yields of up to 16% have been recorded, while studio and one-bedroom apartments near Stellenbosch University can generate gross yields of around 7.5%.

Well-located units close to campus rarely remain vacant when priced correctly and leased in line with the academic calendar.

Assess affordability

As with any property investment, affordability should be carefully assessed before committing.

Investors need to calculate all associated costs, including bond repayments, levies, rates and taxes, insurance, maintenance and potential vacancy periods.

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“Getting pre-approved for a bond helps investors make a sound financial decision and signals serious intent to sellers,” says Potgieter.

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Pre-approval also provides clarity on monthly repayments and ensures investors can realistically budget for additional expenses such as maintenance and complex levies.

Seasonal demand

‍Student accommodation follows a distinct seasonal leasing cycle.

The main leasing window runs between September and February, when most students secure accommodation for the upcoming academic year. 

Property owners should factor in the possibility that units may be vacant between November and February, when exams end and students return home for the holidays.

Some landlords offset this gap by offering short-term holiday rentals during the summer period.

Location is key

Proximity to campus remains one of the most important factors influencing rental demand.

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“Students prioritise convenience. They want to be able to walk to lectures and social activities,” says Potgieter. Properties within walking distance of campus or along reliable transport routes typically attract stronger interest and command higher rental values.

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Safety also plays a major role in decision-making, particularly for parents. Well-lit neighbourhoods and secure complexes are therefore highly sought after.

Even properties located only a few kilometres further away from campus may struggle to attract tenants or require lower rental pricing.

Amenities add value

Student tenants increasingly look for properties that offer convenience and lifestyle benefits.

Developments with amenities such as laundry facilities, gyms, shared study spaces or nearby retail outlets often attract stronger demand.

Reliable fibre connectivity has become non-negotiable, while secure complexes are particularly attractive to students relocating from other cities.

Other desirable features include:

• Off-street parking
• Uncapped Wi-Fi
• Backup power solutions such as inverters or solar systems

These features not only improve tenant appeal but can also support higher rental returns.

Funding considerations

‍Funding structures can also influence the investment strategy.

More than 600,000 South African students rely on funding from the National Student Financial Aid Scheme (NSFAS), which includes housing allowances for approved accommodation.

However, students can only use this allowance if the property is NSFAS-accredited.

While accreditation can increase demand, it also introduces certain considerations.

NSFAS sets maximum rental allowances, which effectively caps achievable rental income in certain areas. In addition, payment delays can sometimes occur during registration periods while funding verification is completed.

Investors therefore need to balance the advantages of strong demand against the potential cash-flow implications.

Maintenance demand

‍Student accommodation generally experiences higher wear and tear than traditional residential rentals.

Frequent tenant turnover and shared living arrangements often result in greater usage of kitchens, bathrooms and communal areas.

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“Because of increased usage and annual tenant turnover, student properties may require more frequent maintenance and repairs,” says Potgieter.

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Investors should therefore budget for higher maintenance costs when calculating returns.

Beyond graduation

For parents purchasing property for their children, it is important to consider the investment beyond the student years.

Well-located properties close to universities often retain strong resale demand and can continue generating rental income long after a child has graduated.

University towns attract a wide range of tenants beyond students, including lecturers, administrative staff and post-doctoral researchers.

This broader tenant base helps sustain demand and supports long-term property values.

The opportunity for long-term investors

Student accommodation remains one of the most compelling buy-to-let opportunities in South Africa’s residential market.

With demand continuing to outstrip supply across many university towns, carefully selected properties can deliver strong rental yields while benefiting from long-term capital appreciation.

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“With demand for student accommodation continuing to outpace supply in many university towns across the country, well-considered investments can offer attractive yields and meaningful long-term capital growth,” concludes Potgieter.

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For investors willing to plan ahead and understand the market cycle, the journey from campus housing to capital growth can be a rewarding one, says van Rooyen who educates investors on where and how to buy student accommodation around the country.

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