Kenya’s universities are set to build accommodation for more than half a million students in the next five years, driven by public-private partnerships.
Student accommodation is now suffering from a shortfall so severe that it is accounting for 40 per cent of Kenya’s housing shortage, according to real estate researchers Jumia House.
The research reported 280,000-bed spaces in universities and colleges in Kenya, compared with a student population of 769,000 and rising. In 2015, alone, the student population rose by 80,000 driven by expanded enrolment across both self-sponsored and government sponsored students.
This has strained on-campus accommodation facilities to overflow, forcing students to seek nearby private accommodation.
Real estate investment management firm JLL, presenting at the EAPI Summit in April, argues that, as a result, student housing in Kenya “is now a powerful alternative asset class,” with “definite growing investor appetite for the sector.”
Statistics to be released at the summit project that PPP projects will now create more than 500,000-bed spaces for university students in the next five years.
“The PPP projects on student accommodation come at a time when there is a mounting need for appropriate, affordable student housing in Sub-Saharan countries. In Kenya, the situation is particularly dire, with universities currently able to service only 25 per cent of the need,” said Dr Gachanja, Kenyatta University Project Lead.
“Building accommodation through PPPs mitigates risk, reduces the requirements for real estate expertise, and lowers the development costs, for universities. It also speeds up procurement and delivery. Universities take about five years to procure and start construction. However, with PPPs, the process takes less than five years. Moreover, such initiatives on student housing lead to expanded campus capacity and develop high standard facilities for students.”
Globally, student accommodation through PPPs has been successful in South Africa, Belgium Egypt, and India. In Kenya, it is hoped the PPPs will deliver the progressive clearance of student admission backlogs that have grown since 1992 so that students are no longer waiting for two years to join universities.
Kenyatta University is among the public institutions negotiating a PPP project under Kenya’s Public-Private Partnership Act of 2013. The university’s PPP initiative will result in housing for an additional 10,000 students that is regulated, fairly priced, and eliminates transport costs in getting to classes.
“We are at the financial close stage for the Sh5bn project and hope to break ground in 2017”, said Dr. Gachanja. “The project is on a build, operate and transfer framework and in 20 years the property will be transferred to the university. This will keep the university stable financially since it will not have had to incur construction expenses.”
By living on campus, students can safely study in the libraries and use other university facilities after dark, which are factors that are critical to the intellectual development of the next generation, according to a World Bank report.
“There is now burgeoning interest in student accommodation from local and international entities, both public, private and the in-between, in public-private partnerships. The Kenyan government has also been putting serious effort behind the feasibility of a build, own, transfer (BOT) model that allows private owners to develop and gain returns on the land before selling it to a particular university when they can eventually afford it,” said Dr. Gachanja.
“This is set to remove the huge costs of building student housing that is the current roadblock to the provision of student housing in the public sector, owing to the inability of government higher education ministries to afford this scale of capital outlay. Across Africa, an average of only 4 per cent of the GDP of most sub-Saharan nations is being deployed in education.”
The new financing models would open the way for the use of land such as the Jumu area around the Jomo Kenyatta University campus for either ‘on-campus’ style housing or the hotel-cum-apartment complexes popular in South African student areas, which provide security and the key student amenities.
The Kenyatta University project is being developed as a pilot project in Kenya, but if successful will open the way for similar developments across other public universities, according to presenters at the EAPI Summit.
The JLL report presents such investments as significant opportunities based on student incomes and stable rental periods, as well as the scale of demand, which assures high occupancy rates.