Investors look at NC towns to build their property portfolio

ON THE MARKET: This home in Postmasburg with four bedrooms, four garages, two bathrooms and many extras including a fireplace, flatlet, Jacuzzi, sauna and swimming pool among others is on the market for R5.4 million.

RIGHT: An artist’s impression of Northgate that is being built in Daniëlskuil. PROPERTY investors have been advised not to ignore smaller towns in the Northern Cape, including Postmasburg and Danielskuil, where rentals are on par with Cape Town and the northern parts of the country.

Leonie Olivier, a property agent in Postmasburg, said recently that most people who live in the town are either employed by the Kolomela Mine or by one of the many other mines that are opened in the area on a regular basis.

“The mining industry here is growing tremendously and it is estimated that around 12 households – consisting of specialist contractors, engineers and the like – move to Postmasburg every year.

“This naturally creates a big demand for accommodation, but a small town like ours simply does not have this much housing on offer and guest houses are literally overflowing for months on end with contractors who can’t find suitable furnished accommodation.”

Olivier added that the average rental of a family home in Postmasburg ranged between R12 000 and R16 000 per month, while two-bedroom apartments fetched between R6 000 and R8 500 per month and bachelor apartments were priced between R4 500 and R5 000 per month.

“Not only are these rental figures comparable with rental prices in many of the outlying suburbs of Cape Town, but also with many security estates in the northern parts of the country.”

In an upper-class security estate like Midstream in Centurion for instance, tenants can occasionally find three-bedroom homes for R16 000 per month, while neighbouring security estates offer many affluent homes in this price range.

Olivier stated that a family home in Postmasburg fetching a rental income of R12 000 per month could easily be bought for around R1.6 million, while a home fetching a rental of R16 000 per month is priced at around R2.5 million.

“You are looking at gross yields of nine percent and 7.6 percent respectively in the first year and this goes to show that small towns should not be overlooked when it comes to a decent return on investment.”

At the moment Postmasburg has a variety of spacious family homes priced between R1.032 million and R5.4 million available.

Sandy-Ann Alberts, an agent in Danielskuil, says that this town is around 70km from Postmasburg and derives its name from a coneshaped depression six metres deep in dolomitic limestone which is said to have contained snakes in it and was used as a prison many years ago.

“Danielskuil is a rather quiet little town, but the abundance of water saw to it that humans dwelled in the area since prehistoric times – in fact proof of human existence dating back 800 000 years was discovered in a cave known as the ‘Wonder Caves’ just 40km outside of the town.

“People who live in Danielskuil mainly work for the mines in the area like Finch, Petra and Idwala, but we also get the overflow from Komani in Postmasburg and Kuruman and we have a large farming community”.

Alberts states that, as in the case of Postmasburg, the rental market in Danielskuil is also skyhigh alongside a major shortage of rental stock, especially for affordable single quarters and lock-upand-go units.

“In fact, accommodation in Danielskuil is so scarce at the moment that the local school’s hostel is currently being rented out to contract workers as single quarters. Of course this means that parents from the farming community have to drive to and from town on a daily basis to collect their children.”

Alberts added that her company had also been receiving many queries for business rentals lately, “but unfortunately we don’t have many suitable buildings available”.

“Danielskuil would, however, benefit massively from more clothing stores and retailers like a pharmacy and butchery and will thrive in our town as residents would not have to undertake long distances to get to these retailers anymore”.

A new complex with 16 units, called NorthGate, is currently being built in Danielskuil. “The units have two bedrooms each, are around 76m2 in size and all have stoeps, built-in braais, courtyards and under-roof parking.

“These units are priced from R640 000 to R698 000 and will easily be able to fetch rentals of between R5 500 to R6 500 per month. A clubhouse with a swimming pool and a laundry in the middle of the complex is also being planned as well as eight more units once the first phase has been completed.”

Alberts stated that even though Danielskuil was small there were definitely lucrative investment opportunities waiting to be snatched up by astute developers.

“Danielskuil boasts many family homes with up to four bedrooms for under the R1 million mark, some commercial opportunities, vacant land, a game and cattle farm of 6 066 hectares for R37 million, a beautiful Kalahari guest house that can accommodate up to 40 people and an aquaculture with lucern field for almost R3.3 million, amongst others.

“Our agency is also marketing a commercial erf of 1 000smq priced at R270 000 on the R31 with excellent visibility and a workshop property with stores and office space for R800 000.”

Alberts added that vacant stands in the area were in the market from R180 000 to R270 000 and were ideal for new developments.