Regional Review - Dunedin

It’s no surprise the education and research sector is Dunedin’s most significant employer, generating $351 million in GDP in 2012. More than 20,000 students are enrolled in the University of Otago, a significant percentage of the city’s total population, at 130,000.  Of those students, 70% come to study from outside the city, drawn by such specialist subjects on offer as the School of Medicine, or the promise of the legendary Scarfie lifestyle.  The structure of the university, with its buildings ringed by halls of residence, and interspersed with the villas and older houses which make up the rest of student living, create a true university quarter unique in New Zealand.

Conventional tenancy
For landlords, the structure of the student rentals is quite different from a conventional tenancy. The flats are rented on a per room basis, and signed up for a 12-month lease, from January 1 to December 31 each year.

Wayne Graham, managing director of LJ Hooker in Dunedin, says the process usually starts in July and August for the following year.  “The students know which flats are going to be vacated, and they start to organise their groups,” Graham says. “It’s all about location. Students generally do not want to be more than a 10- to 15-minute walk from their flats to lectures. The most desirable properties are those closest to the university buildings and heading north, which would rent for $140 to 150 per room per week.  Once you go past The Gardens and into North East Valley, rents tend to decrease and, correspondingly, the value of rentals.”

Property condition comes second to location in desirability, but Graham believes the student culture is slowly changing. ‘The days of the guys finding something really rough, because that’s how they want to live, are coming to an end,” he says. “If you don’t keep up the maintenance on your flat, you’ll be left with a vacancy at the start of the year. The best [flats] get picked up first. If you haven’t rented your flat out by the start of the university year, you’re going to need to drop your rent, and try to get a 10-month lease signed up.”