Should property owners be withholding the availability of their investment property for long-term rentals with an eye towards the 2010 Soccer World Cup?

Is this likely to increase income from the property in 2010 overall?

Is the potential income to be made from a let during the 2010 Football World Cup going to be worth keeping a rental property vacant until June 2010?

These are questions that thousands of homeowners are asking themselves, as the fervour to 2010 picks up and homeowners consider the potential amounts they could make by letting their homes out for the tournament period, says Jules Arnott, Seeff Properties Cape Town CBD Rentals Specialist.

"I am increasingly being asked by owners to withhold their investment property to ensure availability during the World Cup," says Arnott.

Arnott suggests that "if you live in the property yourself, and you do not necessarily have to be in Cape Town for the tournament, and considering that schools will be on holiday, why not enjoy that overdue foreign holiday from the rental income?"

"If you own an investment property, however, it is not that simple," he adds.

He says there are many other considerations to be taken into account.

"If your investment property is already fully furnished and suitably equipped then it certainly makes good sense to market the property for the winter months at peak summer rates. However, and this is highly relevant, if this means turning down a longer term rental offer, the likelihood is you may be out of pocket in the long run. This could see your property standing vacant and unrented in the run-up to the tournament, and again afterwards during the notoriously quiet winter months. This will more than wipe out any expected windfalls from the tournament."

Arnott says his recommendation in this case would be to remain open-minded to both long- and short-term rental opportunities.

"If your investment property is currently unfurnished then it will almost certainly be prudent to keep it this way."

He says that one should consider the following:

Typical CBD apartments currently rent per month for:
1 bed: R6k – R6,500 unfurnished / R8k – R9k furnished
2 bed: R8k – R10k unfurnished / R12k – R15k furnished

The expected nett income per day due to an owner for the World Cup peak period is:

1 bed: R1k – R1,500 = based on 50% occupancy for tournament = R15k – R22,500

2 bed: R2k – R2,500 = based on 50% occupancy for tournament = R30k - R37,500

"To fully furnish and equip a one-bed apartment costs in the region of R100k. You need to ask yourself how long it will take to recoup this outlay, based on the above income figures?"

"Furthermore, taking into account the current lack of unfurnished apartments and the oversupply of furnished apartments, I fully expect to see a glut of furnished properties standing empty later next year. For my own personal investment, an unfurnished property will stay that way, albeit at a slightly lower but steady and predictable overall monthly rate."

For more information contact Jules Arnott on 083 383 3526.

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