Buy-to-let shows no let-up in Pietermaritzburg

The change of status for Pietermaritzburg since its confirmation as the singular capital of KwaZulu-Natal has of course been positive for the city's property market, with one particularly notable effect being an increase in demand for buy-to-let properties.

Investor interest in such units has fallen off sharply in other parts of the country this year but Dave Patrick, principal of Pietermartizburg agency Homenet Ed Patrick, says rental demand in the city continues to exceed supply and that the shortage is being exacerbated by an increased demand for office space in the Pietermaritzburg CBD.

"This means that central buildings are being revamped to A-grade office space rather than being converted - as in other urban centres – to residential use, and as a result the buy-to-let market here is still doing very well."

In addition, Patrick says, investors have been doing well out of land sales. "A year ago vacant land was averaging out at R360 000 for a single residential site, however the average price now is over R500 000 a stand."

Such growth is obviously excellent news for potential investors, but it is worth noting that there is currently a serious shortage of land for sale in the city.

There are, however, still other investment opportunities. Homenet Ed Patrick is for example currently marketing a R120m residential development called Oak Hill in the northern suburb of Oak Park. Freestanding cluster units with very good finishes are selling here at prices from R850 000 for a two-bedroom unit to R1,1m for a three-bedroom simplex.

"In fact with demand continuing to exceed supply generally in the under-R1m bracket, the Pietermaritzburg market has good overall potential," says Patrick, who notes that entry-level properties such as one-bedroom flats are now selling in the R300 000's and that freehold homes are going for an average of R685 000.

Looking ahead, he says rising interest rates will no doubt play a part in buying decisions but that with a strong contingent of newly empowered buyers, the prospects for developers and investors are good - especially if the local authority releases more land for development in the near future.

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