Increasingly, big ticket investors are now taking position and pushing up investment interest in purpose-built student accommodation, giving signal that there is good opportunity in that submarket.
Students are said to occupy the largest demographic in Nigeria and, according to Laide Agboola, CEO, Purple Real Estate Income, as the number of students in universities increase, so do the demand for purpose-built student accommodation.
Recently, Modern Shelter Systems and Services Limited partnered with Dubai-based Strategic Housing Group (SHG) to develop a 792-bed student housing community called ‘The Myriad Abuja’ which boasts facilities such as study rooms, outdoor spaces, coffee shops, and lounge areas.
The Myriad brand is in the Middle East, Africa, and Asia. It is also in partnership with Asset Living Group, which has over 36 years of experience managing 175,000 units in the United States.
SHG is also the owner of the Myriad trademark. United Capital, Marble Capital and Modern Shelter are jointly funding the project through a combination of equity investments and loan financing. The project is expected to be operational by 2024.
Investment experts say that growing interest in this submarket is to be expected in Nigeria where, according to UNESCO, there are over 100million young adults studying courses in Polytechnics, Universities, and Colleges of Education across Africa out of which 15 million are in Nigeria.
Checks by BusinessDay shows that Nigeria’s already dilapidated on-campus hostels are able to provide accommodation for only 30 percent of the university students whose annual enrolment rate is put at 12 percent.
Uzo Oshogwe, CEO, Afriland Properties, a property management, investment and development company, says that the structured, private off-campus investment model is catching on gradually.
“Hostels for students are an opportunity that is crying for investment and if a developer has an understanding with an institution, it is a worthwhile investment,” she said.
“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, Enugu and Port-Harcourt,” she added.
A new report on purpose=built student accommodation says that to make a successful investment, investors should consider students preferences or factors that determine their choice of hostels.
These include security, amenities, number of occupants, water supply, room size, room ventilation, privacy (considered more important by off-campus students than on-campus students), proximity to lecture halls, hostel management, and drainage system.
Student Accommod8 is one of the frontline local investors in this market. It has already provided over 400 beds across three sites with plans to provide more across five sites. According to its promoters, the company targets about 8,000 beds in the next five years.
Abayomi Onasanya, Founder/CEO of the company, told BusinessDay in interview that “this investment asset gives about 22 percent returns which is more than double what commercial real estate gives, not to talk about residential real estate which gives 4-5 percent returns per annum.”
Oshogwe noted that student housing was a viable long term investment if an investor gets his or her parameters right, adding however that the investment is not without its challenges.
“Student housing has not reached full potential. The constraints such as high cost of construction due to lack of cheap funds; expensive quality building materials, high cost of perfecting land titles, building approval and the length of time it takes to secure same have impeded growth,” she said.
