As the demand for student accommodation continues to outweigh supply, financial services provider Nedbank has described “excellent” investment opportunities in this market, stating on Wednesday that South Africa could soon see the establishment of a new real estate investment trust (REIT) dedicated solely to catering for the student housing niche.

“Although the buy-to-let market is currently depressed, student accommodation is one section of this market that is proving to be an excellent buy-to-let option for private investors, usually for a relatively small capital outlay,” Nedbank Corporate Property Finance regional executive in Gauteng Ken Reynolds said in a statement.

According to the Department of Higher Education and Training, there were currently only 100 000 student accommodation spaces available for a student population of 530 000 – meeting barely 18% of demand.

Reynolds outlined that Nedbank Corporate Property Finance had partnered with several developers that were focused specifically on meeting this critical need for student accommodation, announcing in June last year that it would provide finance to enable accomodation provider CampusKey to provide close to 500 additional beds at the University of the Free State and the University of Pretoria (UP).

Also financed by Nedbank were 1 590 additional beds for the University of Johannesburg and the UP, which were built by property group Respublica in time for occupation by students at the start of this academic year.

Following these investments, Reynolds outlined on Wednesday that Nedbank Corporate Property Finance would now provide property investment group PCI Rentals through its subsidiary, JJP Varsity Lodges, with R221-million to provide 2 574 additional beds to tertiary institutions around the country, with at least another 2 000 to be developed in the near future.

Accommodation provided by this funding would include 289 two-bedroom units, in Newcastle; 1 115 beds in Riviera and Phillip Nel Park, in Pretoria; 530 beds in Brixton and Hursthill, in Johannesburg; 450 beds in Midrand; and 190 beds in Potchefstroom.