"In contrast to the property sales market, rentals in the city are booming."
So says Aengus Lifestyle Properties (ALP) CEO Richard Rubin after his company purchased the residential investment portfolio of ApexHi for R232m. "We're still generating returns of more than 13% with rental escalations of 8% up to twice a year."
"The transaction positions us to take advantage of the huge demand for rental accommodation in downtown Johannesburg."
He says that while successive interest rate hikes have hit suburban property hard, demand for affordable, upmarket rental units in the city continues unabated. Securing corporate head leases remains a cornerstone of the Aengus business model, ensuring a stable tenant base and consistently high returns for investors when the schemes are ultimately sectionalised and sold.
"Young professionals working for large corporates and students at various campuses around the city are still looking to live in the CBDs, and those markets relatively unaffected by the credit crunch," says Rubin.
Aengus currently owns approximately 1,500 units in apartment blocks in the inner city. In terms of the transaction, Aengus will acquire the YMCA building on the corner of Rissik and Smit Streets, Parktown Views and Argyle Precinct which consists of Skyways, Dudley Heights, Argyle Centre and Baker House, as well as Argyll House in Parktown. These are all in close proximity to university campuses, making them ideal to house students.
"All the buildings are fully let and give us a good foothold in the market," says Rubin.
The properties are also situated in the heart of the Gautrain commuter belt.
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