Students’ hostel facilities is a prudent and a viable venture, Madam Stella Baah, Social Security and National Insurance Trust (SSNIT), Properties Manager, Cluster A, has said.
She said the occupancy rates of hostel facilities owned by the Ghana Hostels Limited on campuses of the nation’s traditional universities offered a promising future.
The Ghana Hostels Limited is a limited liability Company established in 1999 as one of the investee companies of SSNIT to address the yawning gap in the provision of descent hostel accommodation to the growing tertiary student population in Ghana.
Madam Baah made the observation in her virtual presentation at the Real Estate Investment Seminar 2021.
The event, which was organized by the Chamber of Corporate Trustees and Ghana Securities Industry Association, in partnership with SLE Global was on the theme, “Student Housing: A New Asset Class in Sub-Saharan Africa”.
The demand for purpose-built student accommodation (PBSA) in Sub-Saharan Africa is growing rapidly, and attracts interest from investors, private operators and developers from around the world.
Within this environment, PBSA in certain Sub-Saharan African regions is set to emerge as an attractive alternative investment category, just as it has in developed markets such as the United Kingdom and the United States.
Madam Baah said following the establishment of the Ghana Hostels Ltd, and a Memorandum of Understanding (MoU) was signed by Ghana Hostels Ltd and the universities for the construction of students’ hostel facilities on campuses.
She noted that the whole arrangement was a Build Operate and Transfer scheme for a payback period arranging from 35 to 50 years.
He said the universities were to provide land for the construction of the hostel facilities while the Ghana Hostels Ltd (that is SSNIT) would finance the construction of the whole project.
She said so far, the Ghana Hostels Ltd had by that arrangement provided 1,644 hostel rooms; made-up of 4,303 number of beds on the various campuses.
She said the hostel rooms provided varied from single rooms with air-conditioners to four in-one, which came in varying sizes and types.
Madam Baah said the occupancy of their hostel facilities had been progressing steadily to the point where on some of the campuses, they had reached maximum capacity.
“In spite of the promising outlook, there are some challenges that any investor would have to be aware of and then plan accordingly,” she said.
She cited consistent increase in statutory payments, which included high grounds rents, increasing cost of premium, insurance premium, property rates and demands by the Ghana Tourists’ Authority for the payment of annual registration fees
She said Ghana Hostels Ltd was not aware of some of these costs or statutory demands for payments at the initial stages of the investment because the properties were seen as part of the universities and therefore, property rates demand would not come in.
“But recently, we have had to make that obligation; we have to fulfill it by paying properties rates, paying annual registrations fees being demanded by the Ghana Tourists’ Authority. These were not anticipated,” she said.
“And we do not even know what other legislations would be enacted in the future, which would add to our cost; so, we should be mindful of that.”
She mentioned that there was sudden demand with the payment by the universities, which had called for reforming the initial MoUs that were signed.
She said the MoUs were signed with the various universities with some gaps, and that recently they had to review or reform them, adding that the initial arrangements to Build Operate and Transfer was also undergoing reformation.
She said other challenges facing their students’ hostel facilities operations was that their facilities were often cited on the fringes of campuses, which sometimes created security challenges to students.
She said there was also the challenge of frequent breakdown of the facilities and therefore, the need for them to have proper and structured maintenance culture for maintaining the facilities.
She said they were now facing competition from the traditional universities, as they (the universities) were now expanding their students’ hostel facilities.
Madam Baah said online teaching and learning was one of the potential threats facing the business of students’ hostel, since those undertaking it were doing so from their homes.