BCM bucks rentals trend

Eastern Cape market buffered by lack of property construction

Rentals in Buffalo City Metro have withstood the national lockdown slump endured by landlords — for all the wrong reasons.

A leading credit bureau has reported that tenants in most SA metros are set to benefit from the surplus in flats and homes, and are in a unique position to bargain down rentals, ask for free Wi-Fi and appliances and sweeteners like one month of free rental.

But, according to the latest data gathered and analysed by credit bureau Tenant Profile Network, this has not happened in BCM.

This local oddity, said Mark

Attwood, the broker-owner of RE/MAX Border, was caused by a severe shortage of stock in BCM and a high demand by people coming in from Mthatha and Butterworth.

He said developers were wary of investing in residential properties because of problems in getting plans approved by Buffalo City Metro and a long waiting period for these plans to wend their way through the BCM system.

Building costs were high in the metro and profit margins narrow, he said on Wednesday.

Their residential book performed “really well”.

“We went out really early to speak to owners and tenants and put payment plans in place. Very few people did not pay.”

The (local) market was relatively unimpacted by the lockdown. East London has had a shortage of residential property for some time.

“There is a massive demand in places like Southernwood and Quigney, where properties with 60 bedrooms are fully tenanted,” he said.

In the higher market segment carrying rents of R25,000 to R30,000 the take-up was a bit slower “but we are still renting them out”.

He has worked in finance around the world, including Dubai and London, but he still ponders why the East London market bucks the trend.

“We are an odd place. We are celebrating sales and rentals in the property market but we don’t know what the future looks like,” he said.

A telling comparison is with Port Elizabeth. East London property prices are significantly higher.

In its latest edition of Residential Monitor, the Tenant Profile Network found that while the national rental market was sagging, the Eastern Cape was buffered by its lack of property construction.

Shortage of stock kept the provincial rental market in a state of good demand.

Vacancy rates of 7.4% in Buffalo City Metro and 9.9% in Nelson Mandela Bay were in a positive position.

In stark comparison, up to 20% of properties to rent in Johannesburg and surrounds were standing empty.

With demand hitting its lowest in years, landlords were going to have to start bargaining to attract tenants, including enticements like deposit-free rental agreements.

The bureau’s data shows that 11.4% of the rental market nationally is standing empty as former tenants went to family homes, or families started sharing space with other families.

The number of rentals standing empty has risen since the start of the year by 50%, the bureau reported.

The bureau also found that:

● In the Western Cape the rush to turn Airbnb space into longterm rental was creating a glut of available rentals; and

● In Durban 19.4% of rentals were empty but the North Coast market was holding.

FNB was expecting rentals to fall below last year’s amounts, the Residential Monitor said.

High demand by people coming in from Mthatha and Butterworth