ASUU strikes halt student housing growth

Between 2019 and the first quarter of 2020, student housing investors or landlords had the challenge of coping with surging demand from students, whose enrolment figures were growing year on year.

Lack of enough off-campus student hostels also affects the business of housing agents as they are most of the time unable to find desirable hostels for students. This means that opportunities in this segment of the real estate sector is limitless and present a good haven for private investors with strong yield appetite.

Rents are quite high as BusinessDay learnt from Student Accommd8, a major space supplier in Lagos. The company has already provided over 400 beds across three sites with plans to start construction on 2,500 beds across five sites.

One of its latest developments is Cedar House, a N350 million facility comprising 140 beds situated in Pan Atlantic University (PAU) campus along Lekki-Epe Expressway, Lagos. Rent in this facility is as high as at N850,000 per annum for single bed space; N700,000 for double bed space, and N580,000 per student for a room with four-bed spaces, and students were paying promptly.

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Omotoyosi Belgore, the company’s chief operating officer, told BusinessDay that students were spending, on the average, about $1,000 every year on hostel fee and, specifically in Lagos, students spend between $300 and $360 for a bed space per annum, that is, for the ones that are semi-furnished. “For fully furnished, you will see hostels that go for as high as N700,000 – N850,000 per year,” he said.

But this rewarding investment story often gets punctured by frequent industrial action by the Academic Staff Union of Universities (ASUU) over disagreement with Federal Government. This took a turn for the worse in 2020 when the union stayed away from lecture rooms for nine months.

“There has been no demand for student housing as a result of the universities’ strike over funding agreements with the central government,” confirmed an investor who did not want to be named, hoping that the peace agreement the lecturers had reached with the government would be more permanent than in previous seasons.

According to the investor, ASUU strike and the Covid-19 pandemic have conspired to halt the growth in student housing, adding that private capital that has gone into developing hostel facilities on campuses is becoming hard to recoup as no income comes from those facilities during strikes.

For the nine-month period the ASUU strike lasted, he said, saying his household income dried up as no student paid any rent for the hostels. “Though schools have been asked to reopen and the lecturers are expected back to the lecture rooms, many of the students are still staying back,” he noted.

Records show that about 70 percent of Nigeria’s growing college population is seeking alternative accommodation outside poor campus hostels, meaning that the dilapidated on-campus hostels are able to provide accommodation for only 30 percent of the university students whose annual enrolment rate stands at 12 percent.

An analysis of the market by Real Estate Investment Series (REIS), powered by Estate Intel in partnership with K.Parkwood Properties, shows that the gap between student housing needs and supply has become widened, thereby opening investment opportunities for prospective investors.

“This gap is evident in the increased number of enrolling students into tertiary institutions in the country,” said Dolapo Omidire, research director at Estate Intel, citing figures posted by the Joint Admissions and Matriculation Board (JAMB).

The figures show that 1.8 million candidates registered for the 2019 Unified Tertiary Matriculation Examination (UTME) and 1.9 million candidates were registered in 2020, which is the highest number in the 41-year history of the board.

Student housing as an investment asset can generate about 22 percent returns, which is more than double what commercial real estate gives and more than the 4-5 percent returns per annum on residential real estate, according to Abayomi Onasanya, founder/CEO of Student Accommod8, who spoke with BusinessDay.

For Godwin Asuelimen, head, Core Product, Propertypro.ng, investment in student hostel is viable, especially in areas with high number of tertiary institutions.

“It is a booming market and something that is growing at the moment. You see a lot of people investing, especially off-campus. It has been higher in areas that have booming student population like Lagos, Benin City, Enugu and Port Harcourt,” Asuelimen pointed out.