Growthpoint to invest R1.2bn in student accommodation

Growthpoint, which is the biggest property company in South Africa, is planning to put around R1.2bn into student housing by 2026. They’re doing this because they think more students will need housing, and this could help make up for problems in other parts of their business.

In South Africa, there aren’t enough places for students to live – they need about 500,000 more beds in proper places, like dorms, as said in a report from 2021 by the International Finance Corporation. This has caught the attention of wealthy real estate companies.

George Muchanya, who leads Growthpoint’s Investment Partners team, shared his thoughts:

“I think what’s important to understand is that it’s a lack of institutional-type of accommodation.” He mentioned this on Tuesday, August 16th.

The timing of this investment is interesting because the South African real estate market, specifically the part called real estate investment trusts (REITs), is facing challenges. These challenges are about keeping the money they pay to investors (dividends) steady. This is because more people are working from home, so there are many empty office spaces.

Growthpoint, which started a special fund just for student housing last year, wants to have more beds for students. They’re planning to increase the number of beds by more than 20% to reach 8,800 beds by the end of 2024. They’ll add even more the year after that.

This investment will make their total property worth around R4bn by 2024. Right now, it’s worth R3bn, as of the end of June. They currently own 10 places where students can stay in Johannesburg, Pretoria, and Cape Town.