select
|

Strong demand for Cape Town central Southern Suburbs rental accommodation

The demand for rental accommodation in the central Southern Suburbs of Cape Town is stronger now than at any previous stage in the city’s history – and is likely to gain further strength in the coming year, says Tony van der Lith, the Rawson Property Group’s franchisee for Newlands.

Van der Lith’s rental portfolio covers not only Newlands (where his team is also selling homes) but also Rondebosch, Mowbray, Rosebank, Kenilworth and Wynberg.

“Our Portfolio Administrative Manager, Lindy Mason, is signing 10 to 12 new leases each month,” said van der Lith. “Our portfolio currently comprises 250 units.”

Van der Lith commented that the big demand is in the R4,500 to R6,000 bracket, where the majority of tenants are students attending UCT or one of the other tertiary education colleges in the area, such as Varsity College .

Some students living on their own, said Mason, might spend up to R7,000 per month on rent, while those living in shared accommodation might sign for a R10,000 a month lease together, splitting it between two, three or four tenants. We generally do not advise our clients to rent to students but rather to the students’ parents, as they are generally more reliable and savvier with the process.

For free standing homes in the central Southern Suburbs area, said Mason, monthly rents will almost invariably be over R9,000 and the majority of homes in these suburbs are likely to command rents of over R10,000.

Some of the more luxurious homes on our stock list, said Mason, are achieving rents that are far greater than the area’s average. This franchise has a three bedroom home in Bishopscourt now renting at R38,000 and another three bedroom home in Newlands at R28,000 per month.

With demand so strong, said Mason, buy-to-let investors are now moving in with increasing rapidity and it is likely that rentals will appreciate faster in the next four years. Currently, she said, they are rising at 6 to 8% per annum and the initial return on investments are usually between 5 and 7%, with the new Rawson Developers’ units like Rondebosch Oaks, Rivers Edge, River Song and The Rondebosch achieving returns slightly above that level.

“Investing in a low cost sectional title unit will usually give a better return on capital than putting one’s money into an expensive free standing home. It has to be said that the maintenance costs of the more expensive homes can be high and it has been said that affluent and big spending tenants are sometimes the most unreliable payers. In general, however, over 80% of Southern Suburbs tenants are in good standing with their landlords, 65% paying right on time and only 3 or 4% defaulting altogether.”

With returns in the rental market currently better than those in the money market, said Mason, there can be a tendency to invest all one’s assets in rentable properties. However, because a small minority of tenants will turn out to be unreliable payers, despite thorough credit checks via the credit bureaux, the buy-to-let investor must make sure that he does not have to rely entirely on rents for his income.

“We also get numerous enquiries,” said Mason, “from parents whose children will be attending these institutions about purchasing a property rather than renting one out for a prolonged period. It makes economic sense to purchase a property instead of renting or paying university resident fees in excess of R 60,000 per annum — especially if they have more than one child who may attend one of these tertiary institutions in the future.”



  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK