Since the release of Botswana Property Report 2019, conversations have been led around what would be the real solution for provision of student accommodation. The report reveals that demand for student housing at more than 10000 beds per year and currently stands at 60 000 beds nationwide, as 85% of enrolled students remain stranded.
With so much opportunity in the student housing sector, why are the developers not jumping into this problem and make some great returns?
A perculiar thing about Botswana’s tertiary education program is that students sponsored by the Botswana Government, which makes up more than 80% of the entire student population, recieve a monthly living allowance that takes care of their accomodation, food and general living expenses. This allowance is about P 1420 per student per month.
On the supply side of student accommodation, developers have to wrestle with the lost 4 months between semester breaks, and the capped rental opportunity that ranges between P600/MONTH and P 800/MONTH.
We conducted a poll to determine what would be more appealing to the public of Botswana with regard to resolving the student housing accommodation. 65% of the participates elected an accommodation subsidy as opposed to an increase in student allowance as has been previously submitted. There have been various protests, strikes and requests to review the student living allowance upward to upto P3000, often citing the increased cost of living.
How could the government address this student housing subsidy? Consideration could be tax incentives for those that build student housing, an income tax exemption would make up for the loss of rental and perhaps would encourage developers to move in this direction.
Another option could be for tertiary institutions to be provided some incentive for offtaking any accomodation provided to their students up front and offering head leases to landlords to reduce the cost of management and improve collection rates. Landlords are concerned that without a commitment from the schools and the government to provide some kind of risk cover, it is not a profitable venture and a lost opportunity.
At the end of the day the current opportunity lies with one who is able to mitigate all these risks and make a profitable thebe in the end.