Rental demand continues to soar in Richards Bay

Rental demand continues to soar in Richards Bay

Private Property South Africa
Adrian Goslett

The KwaZulu-Natal city of Richards Bay is home to South Africa’s premier bulk port.

Built in 1976 for the export of coal, it has since expanded into other bulk and breakbulk cargoes.Richards Bay was founded at the end of the 19th century as a fishing village. In 1976, the harbour was dredged deeply enough to make it a real seaport. It quickly grew to become the second largest port in South Africa and today around 1700 vessels are dispatched here annually, which amounts to around 55% of South Africa's total sea freight. The port specialises in export goods, mainly raw materials such as steel and coal, with the coal terminal processing an annual volume of 68 million tons. The port has attracted big investment and Richards Bay boasts huge industrial structures.

Most of South Africa’s aluminium is produced here, as is 25% of the world’s supply of titanium, zirkonium, rutile and other minerals.It comes as no surprise then that demand for rental properties in Richards Bay outstrips supply by quite a margin. Trudy van der Vlies, Broker/Owner of RE/MAX Marine which operates in the northern KwaZulu-Natal areas of Richards Bay and surrounding areas of Empangeni, Kwambonambi, Esikhawini and Ngwelezane, says that Richards Bay is often described as an industrial holiday resort. She says most of the area’s main rental income is from contractors who work at the harbour or industrial firms operating in the vicinity.

Van der Vlies reports a noticeable increase in rental demand here, which she says is mainly being driven by the new contracts awarded through companies operating in the area coupled with the ongoing upgrade of the harbour. Lena Eloff, the RE/MAX Marine rental specialist in Richards Bay, reported a busy 2010 in terms of rental agreements, which she said mainly came from the middle class group that rent properties priced between R5,000 and R7,000 per month.These tenants are now looking for more affordability without compromising on quality, while landlords are looking for increases in rental amounts.

While Eloff says that she is currently only signing between two and three lease agreements per day, which is slow for the area, she says there is a steady influx which bodes well. Eloff, who usually concludes between four and five lease agreements per day, anticipates the market will pick up by March, which is usually the busiest month. A three-bedroom home in a security complex can earn a monthly rental of around R8,000, while free-standing houses can be rented for between R5,000 and R9,500 per month, although there are a few exceptions of exclusive properties with excellent security which rent for between R10,000 and R20,000 per month.

Van der Vlies says that some companies cut hours or reduced packages last year in light of the recession, which had an impact on the rental market, but she says this is now starting to pick up again. “We are anticipating a big influx of people to Richards Bay as the groundwork for the harbour upgrade is nearly finished, which means that a range of specialist contractors will now be employed for the next phase of the project.”On the leisure rental side, van der Vlies says that the December holiday rental figures for the area reflected a whopping 95% increase on 2009’s figures in terms of volume.

During the Easter season, Richards Bay holiday accommodation is usually always fully booked. Currently is it 90% full.Says Adrian Goslett, CEO of RE/MAX of Southern Africa: “Richards Bay will continue to be a growth area for the property market, and with rental demand outstripping supply, there are some sound opportunities for property investors.”

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