Student accommodation underpins Dunedin residential property values

Student accommodation in Dunedin continues to underpin residential property values in the city, according to new research from one of New Zealand’s leading real estate agencies.

Analysis just compiled by Bayleys Research - utilising comprehensive data from Bayleys Dunedin sales consultant Gabrielle Wilson - reveals that vacancy levels at student rental houses and flats in Dunedin were now minimal, with any empty rooms often isolated to lower cost basic properties.

Bayleys Research head Gerald Rundle said many landlords were reporting their accommodation as already precommitted for 2011.

The Bayleys research revealed that in 2000, older traditional student flats were rented for between $70 - $75 per room per week for 52 weeks a year, while newer purpose-built flats were achieving a slight premium with a rent of $85 per room.

“Investors were drawn into the student flat apartment market not only from a return perspective, but also on the basis that the entry cost was fairly cheap – with a four-bedroom flat collecting $75 per room per week selling for around $160,000,” Mr Rundle said.

Over the past 10 years, the median sale price for residential dwellings has risen from around $100,000 to currently sit at approximately $248,000.

Mr Rundle said the higher rents of between $110 to $350 per room now encasing the market over the same 52-week period, reflected higher levels of expectation from the landlords in terms of treatment of property, and from tenants demanding superior levels of accommodation and willing to respect their rental units.

“How times have changed,” Ms Wilson said. “The range of accommodation now on offer is the standout feature - from the modest student flat with basic amenities, through to the new purpose built units with broadband connections, heat pumps, microwaves and double glazing.

“The rise in the number of international students has been a catalyst for the introduction of this new ‘luxury’ student accommodation, while many third year and post-graduate students are prepared to take up accommodation away from the traditional student areas. This is seeing students increasingly competing for property against the general residential rental market.”