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Monday, 29 April 2024 18:53

Growthpoint Student Accommodation thrives, adds R1.5bn of assets in two years.

By Lehlohonolo Lehana.

It has been two years since property developer Growthpoint launched its student accommodations. Since then, Growthpoint Student Accommodation Reit has invested R1.5 billion in new investments in the alternative property sector.

Established in December 2021 by Growthpoint Investment Partners, the co-investment arm of JSE-listed Growthpoint Properties, the Reit specialises in investing in strategically located student accommodation designed to support students.

Growthpoint has added 4 000 new beds for students, expanding its portfolio value to approximately R3.5 billion. This includes 12 residences with 9 000 beds across Cape Town, Johannesburg, and Pretoria. With two new developments in progress, it anticipates increasing its beds to 10 400 for the 2025 academic year.

"We are pleased to report that our portfolio occupancy is 98% for the 2024 academic year, exceeding that of 2023," said Amogelang Mocumi, the Reit’s fund manager.

"Our new purpose-built properties, developed by Growthpoint Properties and Feenstra Group, are proving particularly popular, attracting the highest demand and occupancy, "he continued.

Two new properties have joined its portfolio under the brand name Thrive Student Living for the 2024 academic year. Horizon Heights, located in Johannesburg, has achieved a 99% occupancy rate in its inaugural year, attracting students from the nearby University of Johannesburg and the University of the Witwatersrand. Additionally, Fountain Views in Pretoria boasts a 98% occupancy rate, primarily catering to students from the Sefako Makgatho Health Sciences University and the University of Pretoria's Groenkloof campus.

"Our high occupancy levels demonstrate strong demand and the commercial success of our purpose-built student accommodation model, which is supported by quality development and the Thrive Student Living brand, which resonates with our target market," says Mocumi.

Growthpoint Student Accommodation continues its expansion with two new properties slated for development for the 2025 academic year. These properties include a R300 million, 900-bed facility in Braamfontein and a R200 million, 500-bed facility in Parktown. It is also planning a development near the University of KwaZulu-Natal's Howard College Campus in Durban, scheduled for completion in the 2026 or 2027 academic year.

Even with the extensive processes and time required for institutional investors to allocate capital to new investments, Growthpoint Student Accommodation REIT continues to attract serious interest from large investors.

"Investors remain positive about purpose-built student accommodation, even while they have short term reservations about the commercial real estate asset class as a whole," adds Mocumi.

Growthpoint Student Accommodation REIT aims for total returns of 13% to 16% in the long-term. Its target is to grow the portfolio to R12bn worth of assets and achieve a stock exchange listing within the next seven years.