Apartment rentals across the Atlantic Seaboard and City Bowl suburbs are leading this sector of the market according to Dinis Martins, Seeff’s COO for the areas, who says that this applies to long and short-term rentals.
“Apartment living is all the rage these days, fueled by a number of factors”, he adds. “Firstly, the lifestyle is now such that we just see more and more people flocking to the area. It used to be just young, job market entrants and older people who would look for apartment rentals”. “These days”, he adds, “it is across the board, even young families. And, they don’t just come from within the metro, but from across the country”.
“The lack of work-life balance is a major driver of the growth”, he adds. “People are starved for time and no longer have the time or appetite for large homes and gardens or spending too much time driving around. Apartment living is also viewed as more secure and often come with added lifestyle amenities such as an on-site gymnasium, swimming pool and secure grounds to enjoy the outdoors”.
Apartments are also not necessarily a cramped lifestyle. There are now homes in the sky that offer compact living, yet are not short on space or luxury finishes topped with amazing mountain and sea views.
Apartments are also seen as an accessible way of enjoying the fabulous lifestyle without having to pay millions for a property. Martins says that this is good news for investors looking to invest in bricks and mortar, especially in view of the good yields right now.
He expects rental rates to hold firmly this year and investors and landlords should achieve yields of around 6%-7%, but adds that while a poor economic climate boosts the demand for rentals, it tends to cap rental rates and consequently, the yields.
The biggest demand is in the R20,000-R30,000/month range, generally for two and three bedroomed apartments. Obviously the more luxurious the unit and location, the higher the rental that you can achieve.
“There is also still an upsurge in the demand for rentals in the R40,000-R55,000/month range, these being primarily on the Atlantic Seaboard and for luxury properties with a good location and preferably with good views”, he adds.
The short-term market has seen tremendous growth. Cape Town Tourism reported a surge of 28% in foreign visitors in the October to December period while the airports authorities reported the overall highest arrivals on record. A great deal of these arrivals headed to the short-term market, he says.
Although rates vary depending on location and season, the returns are excellent. Landlords are achieving anything upwards of R1,000/day in Sea Point to R5,000-R6,000/day on average. Luxury properties can achieve upwards of R20,000/day.
You can get much higher returns from shot-term rentals, but Martins says risks include sitting with unoccupied periods and spending more on marketing and maintenance. “Long-term rentals tend to be a bit more stable with better calibre tenants, provided that are vetted correctly. Either way, including a management option is now preferred by landlords as the administration, especially on short-lets can be very time consuming”.