Strong demand for rental flats on the Bluff in Durban has created excellent opportunities for buy-to-let investors, who are currently earning returns of up to 8% a year.
That’s the word from Wondera Erasmus, owner of the local Harcourts franchise, who says many young people who would like to buy a home on the Bluff can’t find anything currently listed in their price range and have decided to rent in the area instead, rather than look for property further afield.
This has bumped up the demand for rental units in the area, which contains several different suburbs, and rentals now start from around R4000 to R6000 per month for two-bedroom apartments.Family homes typically achieve rentals of around R7500 per month. Top properties with expansive sea views along “Millionaires Mile” can achieve rentals of up to R16 000 per month, she says.
“The popularity of the area is primarily due to its proximity to the city centre and the Jacobs industrial area. There is huge demand here for homes priced at less than R1m, which is now also being fuelled by prospective investors. There is, however, little stock coming on the market at this level, and most sales activity is taking place in the R1m to R2m range.
“Indeed, well-priced and well-maintained stock in this category sells without delay and buyers need to move quickly once they have found a suitable property. If they wait longer than a day or two to make an offer, the property is likely to be sold to someone else.”
Erasmus says that homes in the more expensive price ranges arealso selling relatively quickly, provided they are well-priced. “For example, we recently sold a neat maisonette in Marine Drive for R2,5m within two days of listing – and the investor who bought it immediately found tenants.”
She cautions, however, that sellers right at the top end of the market do need to temper their price expectations. “Although there is currently a strong sellers’ market, the Bluff’s price ceiling is around R8m and any property over this price struggles to attract buyers. In a recent case a seller had to drop his asking price by almost 25% to bring it down to under R10m in order to try and achieve a sale.”