Private Education sector drives Property Growth: High Street Auction’s opportunity for Investors in ECD and repurposed properties

• Private education sector is booming, with increasing demand for early childhood development (ECD) and tertiary accommodation opportunities.
• High Street Auction offers education-based properties with stable income streams and growth potential, ideal for investors.‍
• Repurposing opportunities include tenanted commercial properties and conversion potential into residential spaces, reflecting the growing market demand.

Private Education sector emerging as key player in SA Property Market

The private education sector, particularly Early Childhood Development (ECD), is poised to become a major force in South Africa’s property market, with significant potential for growth. This assessment comes from Greg Dart, director of The High Street Auction Co., who highlights that the youth population, accounting for over a third of South Africa’s overall population, is driving demand. According to Statistics South Africa (StatsSA), the number of children under five attending an ECD centre or preschool has surged, rising from one in ten in 2002 to one in three today.

The growing challenges faced by the public schooling system have opened the door for private institutions to fill the gap, and as Dart notes, “People want solutions that talk to their lifestyle needs.” In response, private schools are thriving, and enrolment in privately owned educational institutions has doubled in the last decade. 

As of 2024, major private education companies such as Curro and AdvTech are posting strong financial results, with growing revenues and profitability.

Looking ahead, key opportunities in the sector include tertiary student accommodation and the establishment of additional ECD facilities. Dart anticipates an increase in demand for not only functional properties but also properties that are suitable for conversion into educational facilities. As South Africans continue to invest in their children’s education, particularly across varying affordability bands, the education sector’s impact on the property market will only continue to grow.

High Street Auction’s Education-based Property Investment

‍The High Street Auction Co. is seizing this opportunity, with its upcoming auction scheduled for March 27 at Bryanston Country Club. The auction features four education-based properties, providing an excellent investment opportunity for those looking to step into or expand their portfolios in the education sector. Dart points out that fully operational, thriving preschools like these are rare to come by in the market, making them highly sought after.

The properties up for auction are currently leased with strong tenant covenants that ensure a steady income stream and offer significant potential for further growth. A new three-year lease will be signed on transfer, with a 5% annual escalation in place. These properties are perfect for investors looking for stable returns with the opportunity for continued growth in the private education sector.

Property Details and Potential

‍The four properties up for auction are strategically located in high-demand areas, where parents prefer to live near their children's private schools for convenience.

Here’s a closer look at the properties:

1. Bryanston Property: This former residence, expertly converted into a fully operational school, offers 12 spacious classrooms for up to 57 learners, six bathrooms, and expansive playgrounds and gardens.
2. Buccleuch Property: Another expertly converted property, this one features five classrooms for 48 learners, five bathrooms, and a safe outdoor area for play.
3. Petervale Property: A thriving school with six classrooms for 45 learners, four bathrooms, and a spacious play area that offers potential for further growth.
4. Linden Property: This school features five classrooms and four bathrooms, catering to 35 learners, and is situated in a location with strong future demand.

These properties represent a solid investment in the growing private education sector, providing steady rental income with strong growth potential.

Expanding Opportunities: Conversions and Commercial Spaces

‍In addition to the education-focused properties, the March auction will feature a number of commercial properties with conversion potential. Dart notes that the conversion market is currently very active, with a number of companies expressing interest in repurposing properties for residential use. The inclusion of tenanted commercial spaces at this auction offers buyers the chance to purchase properties with predictable income streams, mitigating the risk typically associated with vacant buildings.

Dart highlights the strong demand for fully tenanted commercial spaces, with an increasing number of buyers seeking income-generating properties rather than speculative, vacant spaces. Two of the commercial spaces in the auction are particularly suitable for repurposing and residential conversions, presenting further opportunities for investors.

Prime Location Commercial Spaces

‍One of the standout properties in the upcoming auction is a commercial development located in Waverley, which forms part of a liquidation sale. The property offers a prime location with views over the Melrose Arch precinct and easy access to the M1 highway. Dart emphasizes that location is becoming increasingly important to buyers, with many avoiding areas with dysfunctional local authorities and compromised infrastructure. Properties located in areas with fully operational transport nodes and reliable service delivery are now highly sought after.

Other unique properties in the March auction include a coastal airstrip, development sites like the Andrews Field Airport, and a private nature reserve located north of Struisbaai within the Cape Agulhas municipality. Additionally, a microbrewery and restaurant in Hermanus’ Hemel & Aarde Village are also set to go under the hammer.

Positive Market Sentiment and Growing Interest

Dart is confident that the March auction will be a success, pointing to the positive response already received ahead of the event. The sentiment in the market continues to improve, with more people attending the auctions and converting interest into transactions. Dart concludes, “The already positive response that we are getting ahead of this auction shows us that sentiment continues to improve, and that there is movement in the market.”

The upcoming auction offers a wealth of opportunities for investors looking to expand their portfolios, particularly in the private education and conversion sectors. With a diverse range of properties, including fully tenanted commercial spaces and prime educational facilities, investors are presented with a unique opportunity to capitalize on the growing demand for educational properties in South Africa.

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