One of Nigeria’s leading market intelligence firms, Fortren & Co, has urged leaders in Africa to focus on three key interventions, including tax incentives for Purpose Built Student Accommodation (PBSA) developments, which is a minimum norms and standards framework that mirrors South Africa’s model with flexibility for local innovation.
It also called for university head lease or occupancy guarantee programmes that anchor demands for investors to fix the student-housing crisis on the continent.
The group lamented that Nigeria represents one of the most under-supplied student housing markets in Sub-Saharan Africa, with an estimated deficit exceeding a million beds.
Fortren highlighted this in its latest Africa Student Housing Report, which examines Africa’s purpose-built student accommodation sector across four key markets -Nigeria, South Africa, Kenya and Ghana – obtained by The Guardian yesterday.
The report covers demand and supply dynamics, market performance, including occupancy rates and rents, and profiles of active operators in each market. Africa’s student population is projected to more than triple by 2050, but the operators and capital structures established in the next decade will define who captures that growth.
In Nigeria, the federal government recently approved N250 billion for students’ hostel upgrades nationwide. However, PPP implementation in the PBSA sector, especially outside South Africa and Kenya, remains underdeveloped.
Structural constraints include regulatory uncertainty, limited institutional appetite, high development risk, and misunderstood leasing and return dynamics, while the absence of affordability support mechanisms continues to limit supply, the report stated.
For instance, the report noted that in cities like Lagos, the difficulty with securing suitably sized plots within or adjacent to campuses makes it more difficult for private sector developers to participate.
It recommended that any national financial aid scheme should be structured as a loan rather than a grant, with inflation-linked and predictable annual rates, adding that universities should formalise endorsement of credible PBSA operators as preferred accommodation partners.
“Head lease commitments, even partial ones, reduce the investor risk premium and lower the cost of capital, which ultimately reduces the price students pay,” it noted.
“Institutional investors should prioritise markets with demonstrated operator track records and structural risk mitigation. Acorn’s product in Kenya is the most immediately investable African PBSA opportunity outside South Africa. In South Africa, target operators with diversified revenue streams that reduce NSFAS dependence.”
It further noted that “Nigeria and Ghana’s markets require blended finance structures that absorb first-loss development risk. Developers and operators should treat speed to market as a primary competitive variable. A missed intake means 12 months of vacant revenue.”
The student housing report also emphasised the need to prioritise operational cost efficiency from the design stage, while development finance institutions should continue providing development-stage equity and guarantee structures.
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