Semigration boosts Cape residential rental yields
Semigration to the Cape has been a major boost for the residential rentals market, especially in areas such as Durbanville which offers a great lifestyle, but more affordability, says Daniela de Villiers, Seeff's rentals manager for the Durbanville area.
The higher demand has unlocked more opportunities for investors and landlords in the area, offering attractive rental yields of 6%-10% depending on the area and property, she says.
Average rental rates in the Durbanville and surrounding area range between R9,000 to R25,000, and for luxury homes, upwards of R30,000 per month. Luxury estate homes go to as much as R51,000 and R60,000 per month for homes rented out by Seeff in the Kanonberg and Clara Anna Fontein estates.
Tenants are coming mainly from Gauteng, particularly the Pretoria area. They are drawn to the area due to the central location, reputable schools, and relative affordability compared to other upmarket locations in Cape Town.
Durbanville offers easy access to main arterials, and well-maintained, safe neighbourhoods. The country-like lifestyle and proximity to the Durbanville Wine Valley are also a bonus for people moving from upcountry. Both families and young professionals are flocking to the area. Students from nearby medical facilities, and those doing practical rotations at state hospitals in the area are also drawn to the rental market.
Anneke Roux, another rental agent with Seeff who operates in the Welgedacht area, says the area is also popular with those who enjoy an active lifestyle as they can safely walk and cycle in the scenic surroundings. The highest demand in Welgedacht is in the R13,000-R20,000 range while yields range from 6-10%.
Schools are a big attraction, according to Allison Oosthuizen, another Seeff rental agent. Young professionals are drawn to the good selection of apartments in the area, including those at the Waterfront. Apartments rent out at R9,000-R11,000 per month which is more affordably priced compared to the Cape Town CBD. Townhouses is a popular alternative as they are also well-priced at R14,000-R18,000. Even luxury homes at R41,000-R51,000 offer good value compared to other upper end areas.
The opportunity for investors is mostly for properties in the R1.2m to R2.4m price range where they can achieve a rental income of R9,000 to R20,000 per month, providing a rental yield of 5-7%.
Gratia van Jaarsveld, another Seeff rental agent, however, cautions that landlords must keep their prices in line with the market or they could risk not attracting a good calibre tenant within a reasonable period. Pet-friendly properties are always sought-after. When investing in a rental property, a good location is vital, but landlords must maintain properties in a good condition to optimise the rental and retain good tenants.
The areas of Pinelands and Thornton, closer to the City, report similar trends. Johan Meyer, licensee from Seeff for the areas, says the high demand is due to proximity to UCT, Groote Schuur Hospital, good schools, and access to the airport. Tenants include students, medical staff as well as those working at the Old Mutual offices.
Here too, rental properties are in short supply, and landlords can earn yields of 6-10%. There is high demand for neat, modern accommodation such as the new Pineworx development. Apartments are renting out at R9,500-R14,000 while houses range from R20,000. The highest prices achieved by Seeff over the last year include R25,000 for a rental in Victory Avenue, R35,000 in Uitvlugt, and R42,000 in Links Drive.
Issued by Gina Meintjes
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