The real estate industry came to an abrupt halt in March with lockdown taking its toll as growing economic uncertainty continued to pressure on the market, so when the rental sector in Cape Town’s Southern Suburbs sprung to life on 1 June, it far exceeded cautious expectations.
“The first week has been mind-blowing as far as enquiries are concerned and I think the agents are most surprised of all as we were expecting a slow re-entry into day-to-day activities, but have instead been inundated with requests to view,” says Lorraine-Marie Dellbridge, Rental Manager for Lew Geffen Sotheby’s International Realty.
“Enquiries have increased across the board and we expect to close several deals in the coming weeks, despite the approaching winter months which are usually quiet.”
She believes that this is partly due to the fact that a number of leases will have ended, becoming periodic during the lockdown period and, now that tenants can move again, they are out looking for new homes.
Dellbridge adds that it’s also encouraging to note that the renewed activity is not confined to the lower end of the market as expected, but has been seen in all price bands.
“Frankly, most properties that are priced right, or considered a good deal in the current market, are attracting significant interest, most popular being Upper Claremont homes priced between R18 000 and R22 000 and any two bed apartments in the R7500 to R8000 price range.”
It was also thought that many tenants would look to moving to cheaper accommodation or even away from more congested areas considering the lockdown extension but, for the most part, this does not seem to be the case.
“We are currently renewing existing leases and most of our tenants seem to be staying put. Landlords have been very accommodating as there has been no increase in rentals and we have even seen a few rental reductions to match the current market value.
“The tenants who have moved are those whose leases were coming to an end anyway and they had already secured other rentals prior to lockdown.”
As anticipated, there have been tenants who found themselves unable to pay their rent, especially those in the hospitality and beauty industries who are still not allowed to go back to work.
“At least 30% of our tenants had a difficult time meeting their rentals during the hard lockdown, says Dellbridge, “but we are already seeing a marked improvement in rental payments this month although payments for services remains a bit slow.”
Dellbridge attributes the smooth management of deferred payments to the TPN Credit Bureau who compiled the documentation to enable the industry to cope with the situation, including a Tenant Declaration Form, a Rental Deferment Agreement and a Deposit Utilization Agreement.
According to the current Payprop index for Q1, the Western Cape still has the highest average rental price but only by a small margin and the year-on-year growth was way down; only 1.56% compared to the highest growth for the same period which was 5.95% in the Free State.
Dellbridge believes that this is predominantly due to the fact that landlords are becoming increasingly aware of the fact that if they expect to achieve 2015 rental prices in an overstocked and subdued market, their properties are likely to quickly become liabilities rather than the investments they had envisioned.
The industry is not expected to return to business-as-usual any time soon, but with more and more people going back to work, a sense of normalcy has returned.
“Obviously the industry is still somewhat curtailed by the restrictions and measures in place and ‘going virtual’ seems to be the catch phrase of the day, but we have adapted well with certain protocols now allowing us to conduct actual property viewings.
“And once the economy starts to level out and rental arrears have been eliminated, I believe we will start to see steady growth and stronger market activity again.”
