New residences are popping up all over the outlying hills of Rhodes University, townhouses are being built and large apartment blocks are being constructed. Investors and developers in Grahamstown are betting on an influx of students in coming years, but student populations are stabilising and some real-estate agents think the bubble may burst.
New residences are popping up all over the outlying hills of Rhodes University, townhouses are being built and large apartment blocks are being constructed. Investors and developers in Grahamstown are betting on an influx of students in coming years, but student populations are stabilising and some real-estate agents think the bubble may burst.
“One can’t keep building, that’s the bottom line,” says Jean Rodgerson the manager at Remax Frontier Properties. “You are not going to go wrong with building apartments in Grahamstown, two bedroom apartments will always fill. But it can’t carry on like this.”
According to Rodgerson there is no current lull in the Grahamstown real estate market. Remax has sold 36 apartments in the last two weeks.
“House prices have stayed the same during the whole recession, one of the only places in South Africa.” She credits this to the Rhodes student market.
Rodgerson has also noticed a market for “lock up and go” apartments or houses for the parents of private school children who prefer their own home when they drop off their children to staying in a bed and breakfast.
“There are still three more developments people don’t know about yet. But after this they should stop,” Rodgerson warns.
A key indicator for a future demand is the expansion of the student population at Rhodes as more students will stimulate the local economy and create greater need for housing and student accommodation.
Rhodes University currently has 7 138 students and although enrolment planning statistics are currently under revision, a Rhodes employee who wished to remain anonymous says that Rhodes have already met their 2013 quota.
In the absence of additional government funding, Rhodes University is unlikely to expand. Carolyn Ford, the financial controller for Sotheby’s International Real Estate, believes that the demand for digs has remained stable over the last few years.
However, the construction of new university residences and new flats entering the market could lead to a shift in the real estate market.
In terms of housing prices in Grahamstown, she says demand and supply equalised during the recession. According to Ford, houses in good condition have begun to reach their asking price and she anticipates that it will take around two years for the market to completely recover from the recession Daphne Timm of Pam Golding Properties does not believe the risk of a real estate bubble is high.
“There is no looming bubble, but we as a town need to change what is being developed, we need less 40 unit blocks of flats and should look at retirement homes and groups of units.”
Timm also believes that more co-ordination and planning needs to take place at the municipal level in terms of the town’s development.
“Aesthetically the council should look at stimulating more pleasing units and green areas,” she says. Timm says the demand for these units will certainly depend on Rhodes University’s enrolment figures but she but doesn’t believe that developers have miscalculated. “I should hope they’ve done their homework,” she added.
