South Africa’s rental market is achieving excellent rental rates, and rental property investment opportunities are everywhere
Recent reports show a substantial increase in rental rates, reaching their highest levels in several years. Specifically, PayProp's data earlier this year highlighted that rental rate growth is at its best year-on-year levels since 2017. This trend is reflective of the current economic climate, prompting a growing preference for rentals, as observed by Seeff's rental Property Practitioners.
In this flourishing rental market, specific regions are experiencing particularly high demand. The Seeff Property Group reports exceptional returns for rental property investors, varying from 9% in Century City, Cape Town, to an extraordinary 19.5% in the Melrose and Illovo areas of Johannesburg North/Sandton.
High-End Rental Property Investment Opportunities Soar in Cape Town
Cape Town's rental scene is buzzing with excitement, especially in the high-end market. Sonya Garisch and Jaqui Bush, two rental Property Practitioners from Seeff Constantia, are making waves, securing rentals as high as R120,000 per month in Constantia. They're seeing an influx of tenants, both corporate and private, local and international, all eager for a slice of luxury living.
More people than ever are relocating to the Cape, drawn by its irresistible charm and lifestyle. This has landlords smiling, as they're now able to command – and get – higher rentals than ever before.
The numbers speak for themselves:
- Seeff has clocked in some eye-catching rentals: up to R134,000 per month in Bantry Bay, R112,000 at the Waterfront, R95,000 in Mouille Point, and the list goes on, with attractive figures in Tamboerskloof, Sea Point, Three Anchor Bay, and the Cape Town Business District (CBD).
- Craig Watchurst from Seeff highlights that apartments are the hot ticket items, proving to be excellent investment opportunities. These apartments include one-bedroom units fetching up to R15,000 per month and two-bedroom units going for as much as R30,000 per month.
- Helga Clemo, who heads up Seeff Century City, shares insights on this sought-after area. Known for its central location, top-notch security, and the perfect blend of work and play, Century City is a magnet for rental investors. For instance, a two-bedroom unit in complexes like Villa Italia and Bougain Villas, priced around R1.8 million, can rent for about R15,000 per month, yielding returns of up to 9.6%.
- Even the one-bedroom units are a hot commodity. In Knightsbridge, for example, a unit priced at R1.540 million can be rent out at R12,000 per month, offering a solid 9% return on investment.
Ross Levin, who oversees Seeff's operations in the Atlantic Seaboard and City Bowl areas, is equally enthusiastic about the state of the rental market and the opportunities for rental property investment. He notes that Cape Town’s luxury property market has bounced back to its pre-pandemic vibrancy.
With residential and holiday tenants flocking in, there’s even a noticeable shortage of available properties. Levin is bracing for an even busier period ahead, especially with a bumper tourist season and continued semigration into 2024.
Rental Property Investment Booms in Gauteng as Rental Enquiries Grow
Gauteng's property scene is alive with opportunity, especially around Johannesburg North and Sandton. The allure? Living close to the bustling Sandton CBD. Caché Pasqualle, rentals manager for Seeff Sandton, shares a local's perspective on why areas like Melrose and Illovo are hotspots for rental investments:
- People working in Sandton don't just want to work there; they want to live there too.
- Rental rates in these areas are fetching between R9,000 and R15,000 per month, with an average of around R14,000, and the returns? They're soaring up to 19.5%.
Then there's Tiaan Pretorius, the manager at Seeff Centurion, who sheds light on other lucrative spots. Take Die Hoewes in Centurion, for instance. Here, a two-bedroom townhouse, starting at around R850,000, can rent out for over R7,000 per month, offering investors up to a 10% gross yield.
But there's more to Gauteng's rental goldmine. In Amberfield, a three-bedroom townhouse priced upwards of R1.4 million can bring in a rental of R10,000, translating to a return of 8.6%. And in the sought-after Midstream area, a spacious three-bedroom townhouse with a price tag of R2.9 million can be rented out for R21,000 per month, offering a healthy return of 8.7%.
Kwa-Zulu Natal Sees Slow Sales but Popular Rental Property Investments
In Kwa-Zulu Natal, Joleen Giraudeau, a manager with Seeff South Coast, shares that in areas like Pennington and Scottburgh, there's a steady flow of city-dwellers seeking the tranquil coastal lifestyle, with many opting to rent rather than buy. This preference for renting is a reflection of people's changing lifestyle choices.
Families, in particular, are making strategic moves. More and more are transitioning from houses to complexes, driven by the dual desires to cut costs and boost security. Property owners are also adapting, with many opting to construct multiple dwellings on their properties for rental purposes rather than selling them.
This shift is due to the swift returns they can gain from the high rental demand. The rental rates for houses hover around R8,500 to R10,000, and for complexes, they range from R8,500 to R9,000. These properties are usually priced between R850,000 and R1.3 million.
Elaine Vandayar, the licensee for Seeff Richards Bay, points out three prime rental areas ripe for investment: Meerensee, Arboretum, and Birdswood. Here, sectional title properties are stealing the spotlight. With an average selling price of around R1.2 million and rentals fetching between R6,500 to R7,000 per month, these properties offer an attractive yield of around 5%.
If you're intrigued by the potential of rental property investment, or if you're a landlord looking to maximise your returns in these promising markets, now is the time to act. Reach out to Seeff today.
Related Articles
