Industry boosts Delmas rental market

Extensive industrial development in and around Delmas in the Mpumalanga coal belt is opening up opportunities for investors in new rental units, according to Koos Pretorius, owner of the local RealNet franchise.

4 Bedroom House for sale in Delmas

“The fast pace of new industrial development, such as new mines and manufacturing facilities, is putting strain on the small existing pool of rental properties in Delmas, with contractors at the mines and staff at new facilities like the Sephaku cement plant that started operations at the beginning of this year, vying for accommodation for the duration of short contracts, and in the case of new employees, until they find suitable homes to buy," he says.
Local investors are now stepping into the breach and are increasingly buying up large stands which they subdivide to build between four and eight rental units, he says. And these units of between 180sqm and 235sqm are taken up by tenants at monthly rentals of between R4800 and R6600 as soon as they are released on to the market.
Building costs in the area now range between R4000 and R5000/sqm, depending on finishes, so units like this cost around R800 000 or R900 000 to build.
"And the trend is likely to continue for the foreseeable future due to additional commercial developments planned for the area, such as a casino and amusement park between Delmas and Bronkhorstspruit, as well as an industrial park to accommodate increasing demand for manufacturing facilities," Pretorius says.
Specialist area agent, Karin van Rooyen, adds that there is also great demand currently for three-bedroom family homes at rentals of between R5000 and R6500 per month. Although a fair proportion of contractors relocate their families to Delmas for the duration of contracts of between 18 and 24 months and rent family homes, many other contractors rent homes in the same category for teams of colleagues.
"Thus homes with three or four bedrooms can be rented to accommodate up to 12 residents, but in this case rentals are usually calculated per head, like a student commune. In most instances, these rates are around the R1000 per month mark, which allows landlords to achieve excellent returns," she says.
RealNet Delmas offers tenants who work long shifts additional services such as home cleaning and garden services at a small monthly fee. "This option is very popular among teams of contractors, who basically only eat and sleep on the premises and do not have time to maintain the property in terms of rental contracts," she says.
Meanwhile properties for sale are also in great demand and interest is very high in the R650 000 to R850 000 price range, but stock is extremely limited, she says. "Average sales prices are now between R900 000 and R1,2m and there is marked buyers' resistance above this level. Top properties with prices of up to R3,5m are, however, taken up on occasion by top-level mine managers and executives in the business sector with permanent employment contracts.”

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