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Analysis

Massive need for student housing at African universities

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Student housing shortage creates opportunties for the private sector to build university hostels in Kenya, Nigeria and South Africa.

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Kenya, Nigeria and South Africa are facing a critical shortage in accommodation for university students due to inadequate government funding for new housing developments. To meet the growing demand for higher education, universities are turning to the private sector to build more hostels.

Kenya aims to attract private investors

Masinde Muliro University in Kenya presented a Sh900 million budget proposal for accommodation in the 2011 financial year but got only Sh240 million. It has set aside land for private developers to build hostels, but says the Sh600 million budget gap will have to be met somehow.

"We are prepared to engage with private investors to address a shortfall in accommodation facilities and expansion of other facilities and infrastructure," Sibilikhe Makhanu, the deputy vice-chancellor in charge of finance and administration, told Business Daily in 2011.

According to this article, Prof Makhanu said students spend an average Sh1.25 billion at the university annually, adding this was “a crucial market that investors should tap.”

He says that, over the years, private investors have been hesitant to take up the opportunity, fearing confrontation with students when collecting rent. Some universities have now agreed to collect the rent on behalf of the businesses, a step that is expected to excite investors.

A more recent report in April 2012 in the Daily Nation reported that universities in Kenya are expanding the number of courses they offer, resulting in an increase in enrolment. In the 2007/2008 academic year, the Joint Admissions Board offered 220 degree choices. This rose to 273 in 2008/2009.

The universities view this as an opportunity for investors to construct more hostels near the institutions, the director of public relations at Maseno University, Owen McOnyango, says.

University intake should not be limited by bed capacity, but by the learning infrastructure. According to him, “it is time universities left the provision of accommodation to private investors.”

In March 2013 Construction Business Review announced that Kenyatta and Maseno universities are seeking investors to build hostels for their growing number of students. The newspaper reports:

Kenyatta University (KU) is seeking investors to build a Sh1 billion (US$120-million) housing complex for its students through a public private partnership. The university has issued an international tender for the project whose construction is expected to start in June 2013.

The university has set aside 20 acres at its main campus on which the investor will build hostels for 6 000 students. The housing complex will be put up on a build-operate-transfer model.

KU, whose total student population stood at 18 597 in 2012, currently accommodates 10 000 students – equivalent to 54% of its total student population.

Maseno University in Kisumu is also seeking to partner with developers to put up accommodation space at its main campus, mainly to cater for the needs of its first year students. The university which currently accommodates 6 400 of its 10 000 students has set aside land on which investors can build hostels for its students.

 “There are various ways in which we can engage with private developers, including a public-private partnership,” said Dominic Makawiti, Maseno University vice chancellor.

 “Rising student enrollment has made it more attractive for private investors to set up hostels from which they stand to reap handsome returns,” he said, adding that each unit would earn investors about Sh5 000 per semester.

Prof Makawati said investors have the option of buying land near the university, leasing public land held by local authorities, or building on university land through PPPs.

The fast expansion of local public universities has created a surge in demand for student housing – leading to a steep rise in rents charged by developers, reports Construction Business Review.

Official statistics show that student enrolment in local public universities stood at 157 916 last year, a 62.6% increase from 97 107 in 2007, the newspaper said.

Appalling living conditions for Nigerian students

If news reports are anything to go by, then Nigerian students are facing really terrible living circumstances at universities and there is a critical undersupply of accommodation.

The Daily Trust reported in November 2012 that Nigerian students in some instances were living in facilities so overcrowded and “deplorable” they were likened to zoos, with rooms meant to accommodate four people housing up to 26.

“The hostels are ugly, overcrowded, and unhygienic because of poor sanitation and unsightly toilet facilities. The hostels have no kitchen facilities, and water scarcity means students have to wake up long before dawn to queue for water at the risk of going late to class,” the Nation reported, citing the same report.

A report which assessed the critical needs of Nigerian universities released in June 2012 says only 8.9% of the total student population of 1.2 million students across 61 public universities are accommodated on campus.

Despite the upsurge of the student population in the last decade, there has been no corresponding improvement of accommodation and other students services, the report said.

According to the Nation newspaper, the photographs of hostels taken by the Committee on Needs Assessment of Nigerian Public Universities that toured 61 of the 74 federal and state-owned universities were “quite revealing if not upsetting to view.”

The report which has been presented to the National Economic Council, says existing hostels in universities are “poorly built, poorly maintained, sparsely furnished, insecure and congested.”

What’s more, the lack of accommodation has created a “black market” in which students pay as high as 20 times the official rate including hostel maintenance fees to sleep on campus.

“Water and electricity supply in hostels are very dismal. Some students bring personal generators to hostels. In many campuses, students walk long distances to fetch water from shallow wells with attendant risks, sometimes leading to disaster,” the report says.

Another important finding of the committee is that the Niger Delta Development Commission has the highest number of abandoned hostels projects. Many of them are not more than 35% completed.

Universities littered with abandoned NDDC projects include, Federal University of Technology, Akure, Federal University of Petroleum Resources, Effurun, Federal University of Technology, Owerri, University of Port Harcourt, Abia State University, Ambrose Alli University, Imo State University, Niger Delta University, University of Benin and Adekunle Ajasin University, Akungba.

South Africa says R147-billion needed to address student housing backlog

In February 2012, the Minister of Higher Education Blade Nzimande released a report saying that over R147-billion needs to be invested over 15 years to alleviate the massive backlog and improve conditions for student housing in South Africa.

Nzimande said inadequate student housing had been a contributing factor to the country's high university failure rate. He said the student bed shortage stood at about 195 800 in 2010 and was expected to rise to 207 800 in 2013.

There was also a significant backlog for the maintenance of existing residences, which stood at about R4.4-billion as at September 2011.

Nzimande said his department had already allocated R847-million of the over R3.8-billion infrastructure grant to student housing, of which R743-million would go to previously disadvantaged institutions.

In 2010, 535 433 students applied to be enrolled in the country's 554 residences, but only 107 598 could be accommodated that year because of the limited number of beds available, which means 80% of students could not be accommodated.

"Universities around the country are suffering from a shortage of student accommodation, mainly because of the massive investment needed to build and maintain student residences and the surge in the number of students attending tertiary institutions. Between 50-80% of students attending these institutions require accommodation, but there simply aren't enough beds" Kirstin Schubach MD of Aengus Property Group told eProp News in April 2013.

"Students are discerning consumers and are increasingly looking for clean, safe accommodation with all the modern conveniences at an affordable price," says Kirstin. Aengus owns and manages 30 student buildings around the country.

"There is clearly a dire shortage of decent student accommodation at South Africa's tertiary institutions, but private players with property management experience and the balance sheet to invest in upgrading and maintaining buildings can positively contribute to improving the situation," says Kirstin.

"This approach also frees up universities budgets and enables institutions to focus on their core business – educating students."

Further afield, South Africa-based Aengus is targeting the supply of student hostels in Kenya, according to a report in Business Daily in May. Aengus said that in Kenya alone there is a shortage of 350,000 beds.

The company named Kenya among five African countries in which it is planning to invest ($300-million) Sh25 billion in hostels over the next five years.

Aengus plans to use new building technologies that make it possible to develop housing at a lower cost and faster rate. These would be operated on a 25-year lease before being handed back to the university.

“Aengus is currently bidding for 15,000 beds at two different public universities in Kenya as well as being in the feasibility stage of a 3,000 bed facility for a private institution in Zambia,” James Huff, manager of Africa projects at Aengus Investment Properties, said in a statement.

Summary

EXECUTIVE SUMMARY

Student housing shortage in Africa creates opportunties for the private sector.

REGIONS
Kenya, Nigeria, and South Africa
SECTORS
Commercial property sales and letting

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