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Investors catch on to excellent rental returns in Mossel Bay

Lower-priced residential units in Mossel Bay on the Garden Route are now being heavily targeted by investors anticipating excellent rental returns.


?4 Bedroom House for sale in Pinnacle Point Golf Estate, Mossel Bay
 
Returns of more than 12% per year are now being achieved on units priced at below R300 000, says George Krause, co-owner of leading local agency Harcourts Trio. “Rental properties in this range are in strong demand because of their affordability and landlords can easily find tenants at rentals of R2800 a month for units with a price tag of R280 000," he says.
 
Units in this price range typically offer two bedrooms, one bathroom and an open-plan kitchen and lounge. The best “bargains” at the moment are to be found in the extensions at the edge of town where bachelor flats selling at around R130 000 are achieving monthly rentals of up to R1500, Krause says.
 
Around 60% of investors are local, with the remaining 40% recently coming from Gauteng, Cape Town and Kimberley.


7 Bedroom house for sale in Dana Bay, Mossel Bay
 
Reasonable prices for property across the board are also attracting investors from various parts of the country and bargain hunters are particularly active in the market, he says.
 
“Initially, such buyers usually target properties in distress that are being marketed through the banks' sales aid programmes, because of the misconception that most such properties are being offered at 80% of value.
 
"The reality, however, is that some such properties may be offered at 80% of the outstanding mortgage balance, and not 80% of the market value. In fact many of these properties are ‘distressed’ precisely because owners paid prices above market value at the height of the last boom. And buyers, who do their homework quickly come to realise that the prices of properties in the aid programmes are generally on par with properties offered in the rest of the market."
 
Meanwhile, Krause says, first-time local buyers in Mossel Bay are active in the R500 000 to R800 000 price range, while young professionals between the ages of 25 and 35 who work at Mossel Bay's Petro SA and earn good salaries target more upscale properties in the R1,2m to R2,6m price range.
 
However the luxury market remains quiet, he says. "A top property in Pinnacle Point, for example, has been on the market for about four years at R12,8m - but there are no takers."



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