Tenants are more discerning and aware of what represents fair value

WHILE the rental market in the greater Cape Town residential property market remains buoyant, there has been a correction when compared to the same period last year, which it could be argued was to be expected as the market was overheated, says Mark Burt, Greeff Christies International Real Estate rental manager.

Greeff Properties has analysed the performance of the Cape Town rental market, which shows a correlation with an international survey which highlighted the strength of rentals in the Mother City.

Knight Frank’s Prime Global Rental Index showed Cape Town led the rankings with rents rising by 5.9% in the year to the first quarter of 2017, outperforming international markets like New York and London.

Even though the upper suburban market has softened by up to 10%, depending on the area compared to the first half of last year, the total market is still achieving figures of about 5% growth, says Burt.

Tenants are becoming more discerning and are well aware of what represents fair value. Those moving into the Western Cape from other provinces place great importance on secure living and as such, security estates are sought after, commanding premiums of up to 20% over similar free-standing accommodation, he says.

Given the increasingly congested traffic patterns, access to good schools is a big contributing factor driving rental considerations, and properties located close to quality educational institutions will command a premium.

“While simple yields are significantly lower than those achieved in Gauteng, we are blessed with strong capital appreciation in the Western Cape, which makes a buyto-rent option very lucrative when one factors the historical capital appreciation into the equation,” says Burt.

Properties which are listed at a market-related rental consideration are usually tenanted within 30 to 60 days of listing and anything standing for longer is generally overpriced.

Burt believes the art to tenanting a property is to ensure the property and the tenant are well matched, and a number of factors should be carefully considered by the landlord and tenant.

This will result in a healthy relationship in which all parties are satisfied.