Wise landlords can turn a well-situated home into a solid investment

Corporate demand is driving the residential rental property market in Johannesburg to new heights, which means that the timing has never been better for investors to turn a well-situated home into a solid investment.

?2 Bedroom House to rent in Melrose Arch

Shaun Groves, Pam Golding Properties (PGP) rental manager, Johannesburg northern suburbs says in recent times there has been a growing demand from corporates, particularly multinational companies, to rent residential properties for their employees in Johannesburg and its northern suburbs. "As we approach the 2014 financial and school year, corporate institutions are actively seeking suitable residential accommodation. As a result PGP is experiencing exceptional demand from a number of international corporate clients."

According to Groves, these corporate clients are from a truly impressive range of sectors including:  management and consulting, governments, embassies and councils; trading investment and importing; finance and banking; international airlines; legal; transportation; TV and communications; arts and culture, apparel; energy and construction. These are for the most part multinational companies which in some cases are seeking to accommodate hundreds of employees. A typical example is a large IT firm based in India, which is undertaking skills development programmes in Johannesburg and Sandton, looking to accommodate 400 employees per annum. Groves points out that, while many corporates rent homes on behalf their employees, others provide a rental allowance and allow their people to find their own accommodation.

?3 Bedroom Townhouse to rent in Oaklands

"Landlords who have a solid grasp of this corporate market are able to position themselves to take advantage of the opportunities available and achieve excellent results. Indeed returns on such homes can average in the region of 10% per annum."

Investors who are active in the corporate market appreciate the fact that they are dealing with highly reputable businesses and executives who are wanting to negotiate rental contracts of between one and three years. Another distinct advantage for landlords is that the Consumer Protection Act (CPA) of 2008 does not apply if the tenant is a juristic entity with an annual turnover or asset value of R2 million or more. This is highly advantageous to landlords as it effectively guarantees the rental term with no right to cancel.

Groves points out that the demand from executives and companies for accommodation close to centres such as the Sandton and Johannesburg CBDs is stronger than ever. Certain buildings within the Sandton CBD itself are at a premium while suburbs such as Bryanston, Westcliff, 'the Parks', Saxonwold, Dainfern, Fourways Gardens and Cedar Lakes are also attracting corporate clients and are performing particularly well. Many suburbs situated within a stone's throw of the Sandton CBD such as Morningside, Parkmore and Sandown are also in great demand.

Groves emphasises that the corporate rentals market is fastidious and homes must therefore meet a number of exacting requirements before they will be considered. They typically need to be furnished upmarket clusters within secure developments. There is also, as already noted, a call for upmarket apartments that are in close proximity to the central business district of Sandton.

?1 Bedroom Apartment to rent in Parktown North

"It is critical that employees and their families are safe and for this reason homes need to have outstanding security. Properties must be located in secure, well maintained developments with armed response, alarms and garden security beams. Any empty land around a property is considered an unacceptable security risk to many corporates. At times major international companies may even send specialised security personnel to check the integrity of a property."

"Each corporate obviously has its own requirements for its employees but we find that many are looking for some standard features. For example, three to four bedroomed homes with en suite bathrooms are popular for those executives with families. Swimming pools and underfloor heating are also in demand. Most executives and their families appreciate being close to work, good shopping, entertainment and other amenities," notes Groves.

Suitable schools for their children are particularly important to many expatriates. Fortunately there are a large number of excellent educational institutions situated around Johannesburg. Groves says that many foreign visitors are happy for their children to attend one of the many good local schools available such as The Ridge School or Redhill School. For those who want their children taught within a specific language or culture there are also a number of renowned international schools in the Johannesburg area including the British International College, The French School Lycée Jules Verne and the American International School in Johannesburg.

"It is critical for anyone who is looking to invest in property to rent to obtain quality advice," adds Groves. "One needs to be able to gain an idea of what kind of returns the home will fetch and which areas are the best to invest in. You also need to know what kinds companies are likely to rent a particular property and what features and facilities they are looking for."

He says that few investors can afford for a home to stand empty and it is therefore important that they choose the appropriate property and price it correctly from the outset. "Remember that while multinational companies will generally pay good rentals for the right properties, they are also looking to make savings where possible and won't tolerate being overcharged. You would also be well advised to choose a rental agency that can match your property to the most suitable corporate clients. For their part, multi-national companies look to a reputable agency that can connect them to the right landlords."

"The multinational market is a demanding and highly particular market. However, if you can get it right it can be a very lucrative market to tap into. With the appropriate advice, solid investments that offer good returns can be made by potential investors in this market," concludes Groves.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 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.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 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.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us