13 Nov 2012
Rental properties in Limpopo's capital city are in strong demand and investors are making a comeback in Polokwane's buy-to-let market.
Sandra van der Merwe of RealNet Polokwane Letting franchise, says the rental market is underpinned by a large pool of consumers who aspire to homeownership but fail to obtain financing due to poor credit records, as well as short-term contractors working in the industrial sector.
She says shortages in the affordable sector with rental units in the R4 000 to R7 000 range are almost unobtainable.
"The cheapest single accommodation to be had is rooms in student communes at monthly rentals of around R2 000 - but in some cases up to three students share a room and pay around R800 per head," she says.
However, tenants in higher income groups are prepared to pay a premium for comfortable homes, and units in upmarket security estates are taken up fast at rentals of between R15 000 and R20 000 a month. Van der Merwe says a new listing of 15 rental properties on the office web page received 200 enquiries within two days.
She says businessmen starting up in the city and technicians on short contract on Eskom's power lines, as well as at the mines, prefer rental “packages”. Most don't want to be bothered with hiring staff and require properties that come with a housekeeper and garden and pool services - and they are willing to pay for the convenience.
Achievable rentals now generally equal 75 percent of outstanding bonds, compared to around 60 percent a year ago, Van der Merwe says, and investors are sitting up and taking note. "Investors who left the market shortly after the previous property boom are returning and we are also sourcing rental properties for new investors who view the returns as very worthwhile."
She says local rentals increase by an average of 10 percent a year if tenants renew contracts, and by about 15 percent per year if the property is let to new tenants. Polokwane is also one of the cities where the highest deposits are paid.
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