Cape Town’s Southern Suburbs has long been a popular residential area, especially with families looking to live near good schools and amenities but a spike in demand in the fourth quarter of 2022 driven by semigration has further fuelled the market with stock shortages looming in many suburbs.
This is according to Lorraine-Marie Dellbridge, Rentals Manager in the area for Lew Geffen Sotheby’s International Realty, who adds: “During the course of 2022, we noticed stock steadily dwindling, and by year-end, properties were literally flying off the shelf.
“In January we had less than half the amount of stock than we had in August – just four months previously – and at the moment it’s not uncommon for leases to be concluded within three days of listing.”
Dellbridge says that after a bumper year in 2019, the market ground to a halt in March 2020 with the only real activity being that the market became flooded with short-term rental properties coming back onto the long-term market.
“In 2021, the resurgence of semigration, the reopening of universities, and increasingly realistic pricing expectations from landlords kick-started the market again and we were finally able to let the properties that had been vacant for some time.
“However, last year was when the market really began to bounce back and this strong recovery has certainly been, to a large extent, driven by the country’s economic woes and energy crisis.
“The Western Cape is perceived to have better service delivery and governance than the other provinces and Cape Town also has less loadshedding and, as power outages have been increasing, so have our enquiries.
“At the moment, around 60% of our current enquiries are from people looking to move to the Western Cape from other provinces and, interestingly, we are also fielding a surprising number of enquiries from expats returning to South Africa.”
Dellbridge says that freehold homes in suburbs like Constantia, Claremont Upper, Plumstead and Tokai are highly sought-after with the most active price band being R20 000 to R30 000 per month whilst sectional title properties priced between R8 500 and R13 000 are snapped up.
During the period 2016 to 2021, the Western Cape attracted nearly 300 000 net migrants, with international locations (98 317), Gauteng (65 683), and the Eastern Cape (53 601) being the top three origins and investment buyers are quite understandably eyeing the rental market as a viable option.
However, Dellbridge cautions that whilst rental properties in popular areas in the city are always a good investment, those looking to enter the market now should only do so if they are in a position to make a long-term investment and don’t need to see immediate returns.
“In the short term, you may need to put money in but by year five you should be covering your costs and thereafter making enough to start putting away for a rainy day.
“It’s also a good idea to make sure that you have excess funds to cover your expenses should your tenant have a shaky month or the property suddenly becomes vacant.
“Most importantly, be realistic about the rental price. Get valuations from more than one professional Rental Property Practitioner and make sure they have experience in your area and understand the local market.”
Dellbridge concludes: “Even though times are tough, property still remains the best investment if you buy in the right area and at the right price so do your homework, speak to professionals, and be willing to play the long game.”