South Africa’s rental market is booming and shows promise for buy-to-let property investors.
The mass exodus from Gauteng, Kwa-Zulu Natal, Johannesburg and Durban to Cape Town is contributing to the demand for rental properties. At the same time, tourism and people returning to the office, college, and university are also key drivers. People want to rent before they buy, which presents an exciting opportunity for landlords and investors hoping to buy-to-let property in Cape Town.
Andrew Collins, the rental manager for Seeff Southern Suburbs, affirms the overwhelming demand for rental properties in Cape Town. Speaking on the semigration trends, Ross Levin, licensee for Seeff Atlantic Seaboard and City Bowl, reports that: “The higher interest rate has boosted the demand for rentals even at the top end, but largely only in Cape Town where semigration is a big driver of the rising demand for rental accommodation.”
Buy To Let Property Investment Opportunities in the Atlantic Seaboard and City Bowl
The previously popular price bracket of R25,000 to R35,000 per month is now old news, as the demand for high-end rentals ranging from R80,000 and beyond is skyrocketing. The market is heating up, and luxury is the new normal.
According to Levin, rental yields in the Atlantic Seaboard and City Bowl areas generally hover around 4% to 6%, depending on the property.
- Bianca Wrankmore, Property Practitioner at Seeff, just closed a deal for a rental property in Bantry Bay at an impressive R130,000 monthly. Not to be outdone, Vivien Adler sealed the monthly deal for a Waterfront rental at R120,000.
- Christine Ireland has her hands full, as she recently received an overwhelming 60 enquiries in just 24 hours for family homes in the R40,000 to R50,000 per month range.
- Apartments in the R10,000 to R20,000 per month bracket are also in high demand.
Buy To Let Property Investment Opportunities in the Southern Suburbs
Landlords and buy-to-let investors will be thrilled to hear that the Southern Suburbs' rental prices average an astounding R22,000.
If you’re seeking a lucrative buy-to-let property investment opportunity with the potential for great rental yields, look no further than new developments like The Hub in Woodstock. With tenants ready and waiting, you could enjoy rental yields of around 7%.
- The luxury new property development, Alphen Glen, located on the border of Constantia, offers rental yields of 6.8% to 9% for one-bedroom units.
- In Constantia, prices range between R25,000 to R35,000 monthly, while luxurious properties boast prices reaching up to R100,000 monthly.
- Woodstock apartments offer incredible access to the bustling Central Business District area, so it’s unsurprising that rental prices hover around R10,000 monthly.
- Mr Collins paints a bleak picture, revealing a severe stock shortage in popular areas such as Woodstock, the Southern Suburbs, Hout Bay, and Llandudno. Low and medium-priced properties, around R10,000 to R35,000 per month, are in high demand, leaving potential renters scrambling to secure a place to call home.
Buy To Let Property Investment Opportunities in Gauteng
The rental property market in Gauteng is experiencing a surge in demand, which has also put immense pressure on rental rates. However, John O'Reilly from Seeff Randburg Rentals remains optimistic about the market, as the demand for rentals has steadily increased since January. The surge in demand has been estimated to be between 10% to 20% at least.
Affordability remains a significant factor driving the demand, with the most active price range being R7,000 to R14,000 per month.
- Stock levels in Randburg are adequate, especially in the Linden and Randpark Ridge areas. One-bedroomed units can rent out at R5,500 to R7,500 per month, two-bedroomed units at R7,000 to R10,000 and three-bedroomed homes at R9,000 to R14,000
Buy To Let Property Investment Opportunities in Durban
Durban's rental market is booming. The licensee for Seeff Umhlanga, Brett Botsis, shares that KwaZulu-Natal's residential rental yields are quite decent, ranging from 4% to 7%, depending on the property. However, it's important to note that there are exceptions in certain neighbourhoods.
- Affordability is the driving force behind the surging demand, with the most active range being R12,000 to R25,000 per month. But, interestingly, even luxury rental homes priced up to R50,000 per month are also in demand. It is clear that people are willing to pay a premium for the perfect home.
- Buy-to-let property investors should note that Umhlanga is experiencing a severe monthly shortage of rental properties priced between R18,000 and R30,000. This scarcity has further fuelled the already red-hot rental market.
Seeff recommends that landlords and buyers consult a trusted Property Practitioner for guidance before purchasing buy-to-let property. The potential for high rental yields can easily blind you to the reality of the ever-changing market and tenants’ preferences. It is imperative to act wisely.
For more tips, read Seeff’s blog on the best guide to property investment for beginners.
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