Private investors are increasingly seeking to address accommodation shortages in some tertiary institutions by investing in on-campus hostels.
Student Accommod8, which provides purpose-built student accommodation, is one of the companies maximising the opportunities created by the poor state of many on-campus hotels across tertiary institutions in the country.
The firm has invested in student hostels at Pan African University; Ogun State University, Ago-Iwoye; and Obafemi Awolowo University, Ile-Ife, among others.
“This investment asset gives about 22 percent returns, which are more than double what commercial real estate gives, not to talk of residential real estate, which gives 4-5 percent returns per annum. For this reason, we are encouraging other developers to come in,” Abayomi Onasanya, founder and chief executive officer of Student Accommod8 said.
Godwin Asuelimen, head of core product at Propertypro.ng, described investment in student hostels as “very viable”, especially in areas with a high number of tertiary institutions.
“It is a booming market and something that is growing at the moment. You see a lot of people investing, especially off-campus. It has been higher in areas that have booming student populations like Lagos, Benin, Enugu, and Port-Harcourt,” he said.
Recently, Femi Gbajabiamila, chief of staff to the president, handed over a 484-bed hall of residence to the University of Lagos in an effort to alleviate the institution’s on-campus bed space crisis.
Nigeria has over 1.8 million full-time undergraduate university students, according to Statista. This report excludes students in polytechnics and monotechnics.
According to the Joint Admission and Matriculation Board, about 1,595,773 candidates applied for the 2023 Unified Tertiary Matriculation Examination.
Stanley Boroh, a lecturer at Federal University, Otuoke in Bayelsa State, said that accommodation is a major challenge in the university, adding that most universities cannot provide bed spaces for all the students.
Mordecai Ezeh, a developer based in Owerri, sees the on-campus accommodation business as a worthwhile long-term investment opportunity waiting for investors.
“If corporate firms or individuals get their acts right with a good understanding of where and how to invest in campus housing, it is a worthwhile venture,” he said.
Taiye Fatimehin, a Lagos-based developer, said that individuals can come in by building new hostels and/or renovating the old ones.
He said: “Individuals can get involved by building, renovating, and/or equipping hotels with basic facilities. They can also invest in providing alternative power sources to minimise energy costs.
“But there must be flexible payment options designed to ensure smooth operation of the system such as outright, weekly, or monthly payment structures.”
Eugene Nweke, a civil engineer based in Benin City, described the opportunities as very lucrative to tap but pointed out that funding is a major issue.
“It is a viable business, but the issue is capital; how do we raise loans with low-interest rates. We used to have People’s Bank supporting investors then, but that has changed,” he said.
Nweke reiterated that such investment comes with its challenges. “Student hostel business has not really developed in Nigeria. There are a lot of setbacks faced in the venture such as high cost of building materials, the length of time it takes to get such projects approved by the government, and lack of funds on the part of the investors, among others,” he said.
Mismanagement and corruption have been identified among factors behind the housing crisis in most tertiary institutions.
Destiny Iyama, a student at the University of Ilorin, decried the difficulty students face in getting on-campus bed spaces. “Hostel cost is hiked due to the influence of some private owners who are bent on recovering every dime spent on the building in a short time,” he said.
“This trend of privatisation of public hostels will only lead to the gentrification of the university environment pushing the poor majority out of school, especially with the fee regime imposed by the school management on students,” another student said.
Source: Business Day