City’s top rents heading to R200 000 a month
COULD top-end rents on the Atlantic seaboard and City Bowl hit R200 000 a month soon? Considering that properties at Zimbali, on the Dolphin Coast in KwaZulu-Natal, can fetch R100 000 a month and some Atlantic seaboard properties are already around R170 000 a month, the R200 000 a month mark does not seem far-fetched.
The latest FNB Property Barometer again points to the Atlantic seaboard and city bowl as the strongest property markets in the country.
While inevitably slower, given the economic climate, they still outpace both inflation and properties in the economic powerhouse of Gauteng by some margin.
The barometer notes that at the second quarter of 2017, the Atlantic seaboard average house price inflation rate stands at 29.9% year-on-year and the City Bowl at 21.1%.
Samuel Seeff, chairman Seeff Property Group, says there can be little doubt that, as with the sales sector, the rentals sector of the Cape metro remains the strongest performer in the country.
Reports from TPN have also pointed to the Cape having the best-paying tenants. This is despite the premium that Cape property now commands, including a rental premium of up to 20% and more depending on the area.
While R80 000 a month seemed high just two years ago, top-end properties in Clifton now command R150 000 to R170 000 a month. Whether these rents will be sustainable is questionable.
Dinis Martins, chief operating officer for Seeff Atlantic seaboard and City Bowl, says it is likely top-end rates will come under increasing pressure. While you will get the odd rent at this rate, it is not going to be the norm in a weak economic climate.
The Atlantic seaboard is home to the country’s most expensive rental markets, both for long and short term, with the highest average rates.
Karyn Farrell, rental admin manager for Seeff Atlantic seaboard and City Bowl, says suburbs commanding the highest monthly rents are Clifton, Bantry Bay, Fresnaye and the V&A Waterfront, but Camps Bay is also highly rated.
The highest monthly rents are R80 000 at the Waterfront, R170 000 in Bantry Bay/Fresnaye and R150 000 in Clifton.
While the most popular monthly rental range is between R25 000 and R40 000, rents even in Mouille Point can now reach R100 000 a month. At the V&A Waterfront you can rent an opulent penthouse for R170 000 a month.
Escalation rates stand at around 8% on average while landlords are achieving yields/ returns on investments of about 4% on average, but this varies according to the property and location.
The Atlantic seaboard and City Bowl are achieving record rents.