Appropriately priced rental stock is a sure-fire way to attract tenants. But where in Johannesburg is the demand highest?
The Johannesburg rental market is a tale of two cities. In the east and the south, it is dominated by low-to-medium-end pricing, while in the north it is the higher-end market that is most in demand.
According to Jason Shaw, manager: Pam Golding Properties Fourways and Midrand offices, some 90% of the properties being rented out in Dainfern are to companies, while in Fourways Gardens and Cedar Lakes this figure is about half the market. He adds that in the three estates at least 30% of the homes are bought for the letting market.
“Some 30–35% of all rental properties in areas such as the Dainfern Golf and Residential Estate are made to corporate institutions and it is a very rewarding market for investors,” Shaw says, noting that his office recently listed a fully furnished home in Dainfern Valley for R150,000/ month and that another home in the same suburb was let for R85,000/month last year.
On the other side of town, in suburbs such as Kempton Park, Germiston, Bassonia, Alberton and Glenvista, demand is as high, albeit in the lower rungs. In these areas the biggest appetite from tenants is in the R5,000–R8,000 band for three-bedroom family homes, while two- to three-bedroom townhouses in the sectional title market can be priced from R4,000–R6,000/month.
Says Simon Smith, principal: Rentalsdotcom Full Circle, “Because of the banks’ strict lending criteria with regard to home loans, many people are still unable to obtain finance to purchase a home, and this ensures that the demand for quality rental properties remains high. The demand for rental properties probably still outstrips the supply in most areas; however, with developers coming back into the market, they are now starting to meet the demand.”
Smith notes that over the past five years properties in these areas have yielded in the region of 7,5–9% a year. This is possibly thanks to the large shopping malls, such as East Rand Mall, Mall@Carnival, Golden Walk and The Glen, that are being either upgraded or extended to meet the demand from shoppers in these areas.
The property types most in demand include those that offer good security in either a sectional title or cluster complex, or secure stand-alone homes in well-established suburbs, Smith says.