Student Accommodation Housing
Accommodation Housing for students has emerged as an essential corollary to academic goals and a valuable recruitment tool, and as a result, investment opportunities are opening up for the private sector in the development and maintenance of student accommodation in Nigeria.
After thorough research work by the Brickstone Africa Team, it has been discovered that over the years, the student population in Nigeria has increased enormously, however with this increase, there has not been much development in Student Accommodation Housing and Facilities across many universities in the country. This current status quo presents attractive financial prospects for investors seeking to diversify their portfolio, and for those interested in the economic benefits of the real estate market.
This White Paper seeks to analyze in further details, the profitability of investments in Student Accommodation Housing, as well as the Prospects for Private Sector Participation in Student Accommodation Housing. Moving forward, it explains proven methods to identify such emerging housing investment opportunities, and the things to consider when making such an investment. Finally, it makes a case for impact investment and explores the many advantages of a collaboration between government entities and private investors in student housing through Public-Private Partnerships.
According to the National Universities Commission (NUC), and as of 2 November 2018, Nigeria has 43 Federal Universities, 47 State Universities, and 75 Private Universities. Additionally, while students’ enrolment in tertiary institutions is growing at an average of 12% per annum, the provision of new purpose-built students’ housing is limited. This is evident in the provision of students’ housing which is less than 30% of demand, which in turn, creates opportunities for the development of students’ housing in many cities in Nigeria by the private sector.
In the Education System, with a particular focus on the accommodation segment, there are many shortcomings, from which an opportunity for the private sector is identified. Indeed, these shortcomings have provided a chance for private investors to make impact investment in the student accommodation rental market.
This White Paper explores well researched and calculated reasons why the student rental accommodation is a thriving and profitable market for investors, some of which includes, the surge in student population, and the unmatched development of accommodation and other facilities.
Furthermore, since students spend at least four years in most tertiary institutions, they are potential long-term tenants than other players in Accommodation Rental, and also, the population of students provides assurance about the market and its growth rate. In addition, for students, rents and return on investments are guaranteed, especially when the school authority is involved.
Additionally, there is a high demand for purpose-built student accommodation which provides all the benefits of living in halls of residence, and when these benefits are adequately provided for, there will be a higher demand. These are some important rewards to investing in student accommodation. Other benefits have been explored greatly in this White Paper.
Furthermore, in this White Paper the rewards of a Public-Private Partnership between academic institutions and private investors in the provision of student accommodations are thoroughly considered. Read more on Public-private partnership here.
Some of these rewards include the fact that an opportunity to address the rapidly increasing student enrollment arises. Also, academic institutions can address urgent needs in the provision of student housing and expedite the development process by allowing third parties to invest their own capital which could have been slowed down due to paucity of funding or internal bureaucracy.
Lastly, by encouraging partnership with private investors in provision of affordable and sustainable student housing, academic institutions are able to mitigate risks associated with making considerable investment in construction that could affect the balance sheet and cash-flow of the concerned institution. These reasons are further explained in this White Paper.
This White Paper in expatiating Public-Private Partnerships in the Student Housing Market identifies three models that may be conveniently used for public-private student housing partnerships. These models include Affiliation, Referral, and Structure.
In one, a formal arrangement is entered between the private investors and the institution where the institution directs its students to the third-party partner’s property as if it were part of its own inventory.
In another, the institution directs students to the third party partner’s property in exchange for concessions such as discounted rent, participation in mediation prior to evicting student tenants.
And in the last, a not-for-profit entity (existing or new) issues tax-exempt debt to finance the student housing project. This White Paper demystifies the foregoing through proper explanations and illustrations.
In addition, this White Paper considers some important subject matters that would be crucial for private investors to pay great attention to in order to achieve good returns on investment in the student housing market. Before making an investment, the investor should make research about the population of students at the school, as investment in student housing should be done in areas or locations where there is a greater concentration of students.
In addition, the location of where the accommodation will be situated, should also be considered thoroughly. Ideally, investors should take into consideration the proximity of the accommodation to the academic institution, and if not so proximate, reliable transportation mechanics should be provided, as this would boost customer acquisition.
Additionally, before any money is put into developing the accommodation project, Investors should engage experts to conduct a market feasibility test on the proposed student housing project. The report prepared by the experts in this regard must be carefully studied to ensure that the investment is one that should be taken at that particular time in the choice location.
Another important consideration is the economic fundamentals, as any investment to be done in student housing must complement the economic fundamentals in the city or town where the tertiary institution is located. Other important subject matters are considered more exhaustively in this White Paper.
Consequently, as there is no one way to achieve a common goal, this White Paper provides some insight into distinct areas that an investor can consider investing in. For instance, an investor may choose to put money into Student Accommodation Development where they invest in the land to be acquired for the development of the multiple housing units and furnishing it with facilities and amenities meant for students.
Further, Joint Ventures Developments where developers could partner with universities by entering into build-operate-transfer arrangements on the provision of new accommodation, can also be entered into. Finally, another option is Property Acquisition where investors can buy single-family and multi-unit properties and convert them to student housing or to buy existing student hostels for letting purposes.
OTHER E-BOOKS THAT MAY BE OF INTEREST
Why not contact us to make your Project HappenOur advisors and consultants would be able to schedule an online meeting with you to discuss your project with the overall objective of seeking ways to achieve the “bankability” and protection of the long term asset value of your project. Request a Meeting Now