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Cape Town rental market remains buoyant

Mar 02 2015 15:28
Carin Smith

Cape Town - The rental market remains buoyant with demand having picked up immediately post the December holidays, according to Dexter Leite, Pam Golding Properties' manager rentals in the Cape Town metro region.
 
"We have also experienced a number of buy to let investors entering the market with some 'new' rental stock coming on line," he told Fin24.

"The same drivers remain at play, that is specific nodes or suburbs remaining in demand, virtually across all areas that we trade in. Examples are the Cape Town city bowl, Atlantic Seaboard, southern suburbs, northern suburbs, western seaboard and southern Peninsula."

Lifestyle, proximity to schools, commuting distances to and from work, traffic, other amenities and required infrastructure influence demand.

The city bowl and Atlantic Seaboard lifestyle and location continues to attract high tenant demand on the back of higher rentals and returns.

A snapshot of high end rentals concluded December through February are as follows:

(Source: Pam Golding Properties)

Pam Golding Properties (PGP) recently commenced marketing a development in the city bowl, all apartments being for rental - that is 1-bedrooms for R13 000 to R14 000 per month, 2-bedrooms for R15 000 to R20 000 per month, 3-bedrooms for R21 000 to R26 000 per month and 4-bedrooms for R36 000 per month.

Most of the apartments were let off plan  in a very short space of time, with applications for the remaining few pending.

PGP has also listed the “Versailles Residences” in Three Anchor Bay comprising 55 apartments:

(Source: PGP)

There, however, continues to be a shortage of rental properties in the affordable or demand categories. This implies different price bands in different areas or suburbs.

Most students are by now settled for 2015.

The top end of the market has remained active. In addition to the top end, the middle to lower market remains very active with PGP having concluded many lets in the city bowl, Atlantic Seaboard and southern suburbs rental categories below:

City Bowl

Studio apartments for R5 000 to R9 000;
1-bedroom apartments for R6 000 and R13 000;
2-bedroom apartments for R9 000 to R22 000.

Atlantic Seaboard

Studio apartments for R7 000 to R8 000;
1-bedroom apartments for R8 000 and R10 000;
2-bedroom apartments for R12 000 to R15 000.

Southern suburbs

Studio apartments for R4 000 to R7 000;
1-bedroom apartments for R5 000 and R8 500;
2-bedroom apartments for R6 000 to R15 000.

Bishopscourt (Source: PGP)

City centre

Richard Boxford, managing director of Life Residential, which specialises in Cape Town's city centre apartments, told Fin24 the rental market is "flying".

"In nine years we have never experienced anything like this. It’s the same story across Cape Town it seems," he said.

"A year ago we were leasing furnished one bedrooms at Mandela Rhodes Place at R9 500 per month on six to twelve month leases. They have climbed in value rapidly in the past six months to R11 000, R12 000, R13 000 and now R15 000 per month. Unprecedented increases."

Supply of rental stock simply does not meet the high demand from prospective tenants, said Boxford.

He mentioned changes at Senator Park, which became a notorious building and was closed down under the City of Cape Town’s "problem buildings" bye-law a couple of years ago.

"After extensive refurbishment by the body corporate it has started re-opening. It is like walking into a new building. Very different," said Boxford.

Life Residential recently obtained rentals of R6 900 per month and R7 200 per month for two studio apartments in the building.

"There is a severe shortage of rental property available, which means that studios and one bedrooms lease literally within a day or two of becoming available and being advertised," said Boxford.

"On most rental properties we have between 10 and 15 enquiries within 24 hours of listing. We have now started doing ‘show hours’, where four or five interested tenants will view. As fast as we list rental properties as available they are leased."

He regards it as a great market for property owners or landlords looking for a good return and income stream. This trend also means existing tenants are much more likely to extend their leases and stay put.

As a result there is less "turnover" of rental stock, as tenants move less.

"In the city centre, there are a finite number of apartments. So whilst demand increases and remains high, the overall pool of rental properties is not likely to increase significantly any time soon," said Boxford.

Mandela Rhodes Place (Source: Life Residential)

pam golding properties  |  cape town  |  rentals  |  property
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