Growthpoint, South Africa’s largest property company, plans to invest approximately R1.2 billion ($63 million) in student housing by 2026.
- The investment is driven by the rising demand for student housing and aims to address the shortfall of up to 500,000 beds in the formal sector, as highlighted in a 2021 International Finance Corporation report.
- The student housing sector in South Africa lacks institutional-type accommodation, creating an opportunity for real estate firms like Growthpoint to invest.
- The investment in student housing comes as the listed South African real estate sector, particularly real estate investment trusts (REITs), faces challenges due to the increase in remote working and vacant office spaces.
- South Africa’s frequent power blackouts have compelled REITs to spend significant amounts on generators to maintain operations, adding to the sector’s financial pressures.
- Growthpoint launched a dedicated fund for student housing in the previous year and aims to increase the number of beds by over 20% to 8,800 by the end of 2024, with further expansion planned for the following year.
- The investment will raise the value of Growthpoint’s student housing portfolio to R4 billion by 2024, compared to R3 billion at the end of June.
- Currently, Growthpoint owns 10 student accommodations in Johannesburg, Pretoria, and Cape Town.