Earlier this month, Eris announced a partnership with the IFC for their new student accommodation platform. The IFC intends to make a 150 million rand ($10 million) equity investment in Eris’ South African Student Accommodation Impact Investments Proprietary Limited platform that will help them develop and operate accommodation for up to 15,000 students over the next five years.
With capital commitments into previous real estate funds and projects sponsored by Momentum/Eris, Actis, Lango (Growthpoint Investec African Properties), and many more, the IFC is a notable investor in the sub-Saharan Africa real estate space. As a result, Eris is expecting their support to raise additional funds for student accommodation from other parties.
As investors fight for yield in a more competitive environment, non-conventional property sectors like Student or Young Professional Housing, Healthcare and Industrial are increasingly taking centre stage. Despite COVID-19, which has led some schools to adopt a hybrid of online and in-person learning, the Eris team is confident that demand for affordable student accommodation will remain high. Research from JLL and the IFC indicates that initial yields for South African Student
Accommodation projects that traded within 2019 ranged between 10-11.78%. These attractive double-digit figures are more inviting than the typical single digits noted from the conventional property sectors.
Similarly, in a report we published late last year, Student Accommod8, an African developer and operator of purpose-built student accommodation (PBSA), pointed to exciting yields that can range between 9-20% in Nigeria, depending on the specification and location of the project.
Speaking on the investment, Johan van Vuuren, Executive Head: Student Accommodation at Eris said: “We are excited to welcome IFC as a core investor in our student accommodation platform. Eris has developed a high-quality product at an affordable rental level and we look forward to executing on our substantial pipeline.”
“The business case for the investor is clear – a market-related return on capital with a measurable positive impact on South Africa’s education needs. IFC’s support has advanced our aspirations to fully subscribe to our target 2 billion rand capital raise, which is now within reach,” said Vuyani Bekwa, Executive Head: Fund Management at Eris.
Adamou Labara, IFC’s Country Manager for South Africa, explained: “By helping to address the acute shortage of affordable student accommodation in South Africa this investment will improve student proximity to universities and colleges, improve student safety, and provide a more conducive learning environment.”
What are your thoughts on the most exciting property sectors to be in over the decade?