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Your complete guide to the Western Cape’s rental property market

01 Jul 2019

It is not just the demand for residential accommodation that drives the Cape Town rental market, but added economic drivers such as tourism, conventions and events, corporate contracts and semigration.

This two bedroom, one bathroom apartment in Hout Bay, Western Cape, is available to rent at R10 000 per month - click here to view.

Cape Town has just been voted among the best cities in the world to live in by a Deutsche Bank Survey, outranking major global cities like Rome, London and Paris, as well as Johannesburg, for offering a better quality of life.

Samuel Seeff, chairman of the Seeff Property Group, says despite the challenges experienced over the last year, Cape Town remains the standout as the city with the best lifestyle and service delivery, two of the biggest drivers of the demand for rental accommodation.

This newly-renovated three bedroom, three bathroom home in Tokai, Cape Town, has a pool, veranda, well-maintained garden and is close to schools. It is available to rent at R38 000 per month - click here to view.

Additionally, when there is a degree of economic decline and the residential sales market dips, he says there is always a rise in demand for rental accommodation.

“We have seen that as an alternative to emigration, there has been an influx into Cape Town from other provinces, and these would-be buyers often rent first while they acclimatise to the city before deciding where to buy,” says Seeff.

With the election over, it is expected that both tourism and semigration will pick up once more to provide further impetus to the market. The market has been under pressure over the last period with stock levels rising while the monthly rentals have come under enormous pressure, but Natalie Muller, rentals manager for Seeff Atlantic Seaboard, Waterfront and City Bowl, says after a period of high escalation, the market needed to take a break.

“We are now entering the winter months and a number of Airbnb and holiday rental homes have flooded the market, so there is plenty of stock. Some sellers have also opted to rent out their properties while they wait for the market to improve, having felt the effects of the water restrictions,” says Muller.

What does this mean for landlords?

The market will stabilise - it always does, says Muller. The market has come off a high base, having achieved annual increases of around 10% over the prior few years, and escalations are now adjusting in line with the CPI.

Atlantic Seaboard and City Bowl

This Tuscan-style home in Newlands, Cape Town, offers a fireplace, study, undercover patio and lush garden. It is available to rent at R30 000 per month - click here to view.

Escalations are down to 4.5% to 6% and yields to around 2% to 4%, but the Atlantic Seaboard and City Bowl remain popular, says Muller.

The average monthly rental for Atlantic Seaboard houses is now at R35 000, 18% to 20% down since last year. Apartment rentals are also down, but still come in at around R18 000 per month, on average, given the higher demand from people looking to move closer to the city to save on petrol costs.

Constantiaberg and Southern Suburbs

Sonya Garisch and Jacqui Bush, rental agents with Seeff, say it has been a busy year with the traditionally quiet March actually being a record month for the team, although the market has since slowed with the onset of winter.

This six bedroom, five bathroom home in Constantia, Cape Town, has high ceilings, a play room and patio overlooking the sparkling pool. It is available to rent at R57 000 per month - click here to view.

Most upper-end landlords have kept their monthly rentals stable while the mid-range increase has been around 5%. High-demand properties include gated communities in the rental bracket to R30 000 per month, the mid-range of R15 000 to R25 000 per month and realistically priced cottages and flatlets between R8 000 to R10 000 per month.

Houses average R26 000 per month in Tokai and R42 000 per month for security estates, while Newlands is R30 000 per month, and Constantia is at R46 000 per month.

Marinda Bienz, also with Seeff Southern Suburbs, says there is now an oversupply in the furnished rental market, which is usually the case during winter. Tenants are spoilt for choice and can negotiate.

She says most landlords have not escalated their monthly rentals or have settled for 3% to 4% (down from 6% to 8% in 2017). Some rental homes which achieved R37 000 per month are now receiving offers of R28 000, while small homes are down to R12 000 from R16 000 per month.

Family houses, secure complexes and student flats remain in demand. Apartments range from R6 000 per month for one bedroom and R11 000 for two bedrooms. Townhouses range from R16 000 and houses in the top-end areas such as Claremont Upper and Bishopscourt from R25 000 to R95 000 per month.

Blouberg/Table View/Parklands

Nancy Oeschger, rentals manager for Seeff Blouberg, says the area remains popular for its coastal lifestyle, excellent schools, top-class amenities and affordability, and is attracting tenants from all over, including people moving from Johannesburg. It offers many security complexes and family-friendly neighbourhoods.

This home in Big Bay, Blouberg, has three bedrooms, three bathrooms, pool and patio. It is available to rent at R33 500 per month - click here to view.

Rental escalations are now at around 5% to 7%, but Oeschger recommends that landlords offer flexibility to keep good tenants rather than risk a unit standing vacant given the oversupply of stock, including many new developments. Two bedroom apartments are always in demand in the R7 500 to R8 500 per month range and houses from R14 000 per month. Higher-end properties are moving slower as people are looking to downscale their high living expenses.

Hout Bay and Llandudno

Janine van Heerden, rental manager for Seeff Hout Bay and Llandudno, says after rising significantly prior to 2016, rental prices have dropped by an average of 20% over the past two years and monthly rentals are now under pressure as there is an oversupply of stock.

This north-facing four bedroom, three bathroom renovated home in Northshore, Hout Bay, offers open-plan living areas, mountain views and a wooden deck. It is available to rent at R19 500 per month - click here to view.

An average one bedroom flat now rents out for R7 000 to R8 500 per month and from R9 500 to R12 000 per month for two bedrooms. Family houses in the R20 000 to R30 000 per month range also remain in demand.

Winelands and Boland

Marinda Uys, Seeff’s group rentals manager for the Winelands/Boland region, also reports an oversupply, with some properties taking up to three months to rent out, and now often renting out for less than the previous tenant paid. Escalations are at of 3% to 6%.

This three bedroom, two bathroom home in Tulbagh, Cape town, is available to rent at R14 000 per month - click here to view.

The R7 500 to R10 000 per month rental range is the most popular. Flats tend to rent out from around R3 500 per month for a bachelor unit to R7 500 per month for two bedrooms. Houses start at R7 000 per month for two bedrooms and from R9 000 per month for three bedrooms, ranging to R15 000 per month for four bedrooms.

One area which still bucks the trend with demand outstripping supply is Tulbagh. Melindi Beukman, a Seeff rental agent, says there is big demand for neat one bedroom units and properties under R5 000 per month, but supply is limited. Depending on the rental bracket, escalations are still at 8% to 10%.

This four en-suite bedroom home in Val Die Vie, Paarl, offers underfloor heating, gas braai area, pool and wine cellar. It is available to rent at R50 000 per month - click here to view.

90% of all tenants want a long-term rental of 12 months and longer. Affordability is key with one bedroom units ranging from R2 800 per month, two bedrooms from R4 000 per month while houses range from R5 600 per month.

What does Seeff recommend in the current market?

Seeff’s agents recommend that landlords focus on retaining good tenants, because it is better to have a good tenant than to sit with an empty unit. A three-month vacant period can be very costly.

Most tenants would prefer to stay and not suffer the disruption and expense of moving and may pay a little more than the market rather than look elsewhere. Losing them means you are looking for a new tenant who has more bargaining power.

If a tenant does leave (and they do for many reasons), set the asking rent at a competitive rate in line with the market. Sourcing a new tenant is costly and potentially risky, and you may end up with a lower rent in a falling market.

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