The current state of the Cape Town rentals market has many lessons for the astute landlord seeking to continue to get a return on their investment despite tough conditions. Landlords who pay careful attention will find there is still money to be made. The rental climate is not endemic to Cape Town but should be heeded by investors nationwide.
Two years ago, the Cape rental market was booming, however alarms started to ring warning that rental rates, especially in the upmarket southern suburbs were becoming unrealistic. This year has witnessed demand slowing and the rental market has going quiet. For the first time in years landlords are facing unlet properties. Our letting specialist, Caryn Gillman weighs in on the causes and offers some advice.
- It’s never been easier for tenants to shop around for properties using the Internet. Today’s tenants want the best value for their money and are clued up on how to compare prices.
- Semigration slowed – Caryn says a big factor in slowing demand for properties in the Western Cape has been the ongoing drought, the dreaded Day Zero has resulted in many people from other provinces reconsidering moving to Cape Town and choosing to move elsewhere. The recent rains and rising dam levels may encourage people considering semigration to put Cape Town back on their shortlist.
- The slump in the sales sector has also had a knock-on effect in the rental market. Homeowners not able to sell their homes are now renting them out instead, further increasing supply.
- Demand has been further lowered by the increase in people choosing to house share, opting for more of a communal lifestyle to combat rising living costs.
Caryn adds that, “Financially speaking it is little wonder that due to rising living costs, potential tenants have had to look at more renting in affordable suburbs and turning away from the expensive ones as they cannot afford them.”
Caryn concludes, “Not all hope is lost as we all know the real estate industry fluctuates in cycles and the southern suburbs in Cape Town have plenty to offer in terms of lifestyle making it an extremely resilient market. If you as a landlord are battling to find tenants privately, use the services of a professional agency to ensure your property gets as much exposure as possible across all the property portals, social media and their own internal databases.
If you are you are using an agency discuss pricing options with your agent. Allow them to market your property as the best possible offering by making sure maintenance is up to date and that the property presents well. Be the best on offer in the market. Take realistic look at your rental price – you can’t measure what your property is worth by using outdated stats. Rather lower your price and secure a solid tenant instead of letting your investment stand vacant.
Remember that once the market recovers you can always adjust the rental and negotiate your renewals.” For specialist lettings and rental advice contact Fine & Country Constantia, Caryn Gillman on 021 794 5210
This article has been adapted from the original which can be found at: http://propertyprofessional.co.za/lessons-learnt-from-cape-rental-market/