Load shedding a key to Joburg rental boom

The rental market in Johannesburg is experiencing an upsurge and is expected to remain on a sustained upward curve as more people choose to rent rather than buy.

Chris Tyson of Tyson Properties said that the demand side uptick would continue for some time and was driven by several factors.

“This trend is driven by economic constraints, lifestyle preferences and a desire for flexibility,” he said. Tyson Properties reported a 100% increase in its rental book in the past six months.

Semigration

Tyson said while semigration to Cape Town has been a talking point in the market for years, there was now a significant migration to Johannesburg, particularly among young professionals entering the work environment.

“These individuals prefer to rent rather than buy as it offers them the flexibility to move if they find better employment opportunities. “Working close to home remains a priority in a post-pandemic world and increased load shedding has made people reluctant to work far from home due to traffic and nonfunctional robots.

Convenience is the key for those who rent.” Economist Dawie Roodt said high-density living was a growing phenomenon around the world and that there were two primary factors driving the boom in rentals.

He agreed with Tyson about a lack of confidence in the economy, but added that urbanisation continued to counterbalance that.

He said: “In South Africa, we are close to 50% of the population now being urbanised.” But it’s not just the migration to the city or convenience considerations that are driving the market.

So, too, is lower consumer confidence in the economy and the country, as well as a reduced commitment to bricksand-mortar assets, said Tyson.

The more affordable, high-density apartments in Johannesburg’s municipal areas are experiencing the greatest demand, added Tyson.

The most popular dwellings are low-maintenance, lock-upand-go properties that are generally two-bedroom apartments in secure complexes offering lifestyle amenities such as pools and recreation facilities.

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Immigration

Roodt also suggested that immigration played a significant role. He said home owners intent on leaving South Africa struggled to dispose of their properties in today’s buyers’ market.

So many opt to rent, which feeds the supply side, while tenants choose rental over buying as plans to leave the country deter investing in property. In a robust rental market, landlords and agents emerge as winners.

Consumers, said Tyson, may face a downside outside of the convenience of renting. “People with poor credit ratings lose out as the market is very competitive and quick-moving.

The high demand is also pushing rental prices up.” Tyson suggested that this cycle would continue due to the new generation of economically active people not wanting ownership, rising living costs and maintenance costs for home owners and the interest rate cycle affecting buying power.

Roodt also suggested that the impact of hybrid working had caused some changes in requirements from prospective tenants.

“People are still looking for properties with a work-fromhome option as hybrid tenants don’t need to be living close to the central business district and can be based more in suburban areas where prices and value are better,” he said.

“Some institutions are now requiring more physical presence in the workplace, but are phasing days in with two days a week as opposed to full-time office work.”

Tyson also linked some of the uptick in rentals to a Covid hangover as the weakening rand continued to drive up the price of goods and diminished savings.

He noted that this would keep rental demand strong for the foreseeable future, making the timing excellent for investors looking to buy properties to rent out.

Tyson said property had always been a sideways asset class. “It is not liquid and rental prices will keep up with inflation and rising costs passed onto tenants by their landlords as the trend continues,” he added.

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