Transport and and convenient amenities vital considerations for buy-to-let investors

It is that time of year when parents start the mad scramble to secure accommodation for their children for the new year when they start their tertiary studies. 

It is widely acknowledged that there is a shortage of student housing, but before investing in buy-to-let property to cater for this sector of the market, be sure that it ticks all the right boxes of prerequisites for a good investment. That is the word from Seeff's agents in two of the city's tertiary educational catchment areas, the Southern Suburbs and city centre.

A good local transport network and convenient access, preferably within walking distance, to amenities such as shops for necessities, a gymnasium and of course nightlife is important. A location within walking distance of a university or FET college would be first prize, but a bus or rail network or the Jammie Shuttle in the case of the Southern Suburbs, is ideal according to sectional title agents, Sean Guy and Belinda Keys.

The shuttle that that runs to and from UCT (University of Cape Town) through to Rondebosch, Newlands and Claremont is for example a vital driver for the demand in student housing in the area. Given that there is always a shortage of suitable apartments in the Southern Suburbs, extending the shuttle service to include Kenilworth would not only alleviate some of this, but would revitalise investor interest in that area and increase values, says Guy.

Rondebosch agents, Charmaine Scott-Wilson and Linda Knoop says the suburb is as is usual this time of year, seeing a surge in demand for student accommodation and, as always, there is a shortage of housing. Rondebosch is central to everything and therefore popular for student accommodation.

As a rough estimate, the UCT residences can for example only accommodate about 20-30% of the overall student need of in excess of 26,000 new enrolments each year. Add to this the Varsity College in Rondebosch and you are looking at significant number of students annually that require accommodation.

Parents generally want their children to be accommodated in a safe complex, preferably with secure parking. The ability to share accommodation and reduce costs is yet another plus factor and so two-bedroomed apartments tend to be most in demand, say the agents. Provided you invest in the right area and the right type of accommodation, there is no real downside apart from maintenance and tenant turnover.

In areas such as Newlands and Claremont, one-bedroomed apartments now command a monthly rental rate of around R7.000 while a two-bedroomed flat can fetch about R10.000 per month. In Rondebosch, apartments that are within walking distance of UCT, preferably with two bedrooms and in a complex with 24-hour security such as Rondebosch Oaks are especially popular.
Generally, one-bedroomed apartments in the suburb now rent out for between R4.000 and R6.000 per month while two-bedroomed units can go for up to R8.000 per month, says Scott-Wilson and Knoop. Another popular option is communal houses where room rental rates range between R3.500 and R4.500 per month. As a general guideline, buy-to-let investors can expect a gross yield of 5%-7% on average.

The central city feeds into a number of tertiary educational institutions and there is always a steady flow of tenants and buyers looking for apartments here according to agents, Warren Emett and Jason Paans. Aside from the obvious convenience of being within walking distance of just about every facility that students could want for including a vibrant nightlife, the introduction of the MyCiti bus route means that students can now get to the Waterfront and beaches of the Atlantic Seaboard with relative ease. The agents note further that there is now a significant gap in the market for more affordable accommodation in the city.

Here too, two-bedroomed and even three bedroomed units are most in demand. While rentals vary depending on the building, as a general guideline, rates now range between R6.000 and R10.000 per month for a one-bedroomed unit. Two-bedroomed apartments can be let out for between R8.000 and R14.000 per month. Gross rental yields here currently range between 5%-8%, says Emmett.

Some of the important considerations for prospective buy-to-let investors include ensuring that the particular complex is carefully managed in addition to of course managing the collection of monthly rentals and general management of the tenant, say the agents. Other than that, there is very little downside to investing in apartments in the city. Aside from student housing, there is strong demand for general residential accommodation in the city.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us