Weekend Argus (Saturday Edition)
IT IS BOOM TIME IN EKASI
Former townships’ lucrative rental market offers extra income opportunities to property entrepreneurs
WHILE the rest of Cape Town goes through a property slump, it is boom time in the townships.
As migrants, students and professionals return to the areas as tenants, emerging property entrepreneurs such as nurses, teachers, journalists, taxi owners, retirees and business people are buying up and converting properties to service this lucrative new rental market.
Developments up to 10 units, are often double-storied, and vary in size from about 10m² to about 40m². Rents range between R1500 and R3000.
Development Action Group (Dag), an NGO with more than 30 years’ experience in urban governance, housing and community organisation, has called it “backyarding version 2.0 in that it is bricks and mortar, the accommodation is legal, safe (built according to approved plans) and affordable”.
This new type of rental accommodation in townships is located mostly in the back yards of properties.
Entrepreneur Fernando Antonio, founder and chief executive of township property portal ZAkasi.co.za, says the rental market in the townships is “through the roof” and has had a major impact on property sales.
“You will even find some properties for sale include elements of a shack and this can be a selling point as it can create a rental income for the buyer,” says Antonio.
The stats corroborate these boom time findings: FNB’s five-year property trends data, from 2014 to 2018, shows areas FNB classifies as “former black township regions”, including Gugulethu and Khayelitsha, indicate price growth of 132% in that period.
The rental market in particular is thriving with professionals and students looking for affordable accommodation in areas with good transport services. Migrants and immigrants who are moving from shacks into bricks and mortar homes are adding to the market.
According to Antonio, many people are seeking to buy property with the sole intention of letting, leading to a thriving the buy-to-let market.
“There is a huge opportunity in the townships for rentals. People are buying to invest in this.”
Ayanda Mbele, a property entrepreneur who has bought a few houses and extended them so he can rent them out, says most people can’t manage on their monthly incomes so are looking at ways to generate additional income by using the property they own.
They do this either by erecting a shack in the back yard to let or by building bricks and mortar accommodation. Some are buying property not to live in but to let.
“You just have to go onto Facebook to see how big the need is for places to rent in the townships. Everyone is looking for flats in the right price range, so those of us looking to make some money know we have to either buy property to service this market or convert our homes.
“One of the popular areas is Mfuleni as it is viewed as quite safe. But you will find property entrepreneurs also doing well in areas such as Nyanga, Kraaifontein and Delft, where the government built small houses on big plots that now can be built on for the rental market.”
If returns are so good in the townships, why are more traditional agencies and entrepreneurs not digging in?
“You sell and buy where you know,” Antonio says.
“Here you have owner-landlords who either live on the property or close by. Added to that many transactions here are done through word of mouth.
“Bigger estate agencies complain about the fly-by-night attitudes of estate agents and sellers in the townships and just haven’t been able to get their heads around how things work in ekasi,” says Antonio.
“For one, in the townships, cash is king and sometimes overrides an agreement.
“It is troublesome that some sellers don’t want to wait three months for a transfer to go through. They will easily dump a potential buyer who has gone to apply for a bond if another person arrives with cash.
“We are trying hard to educate people so they at least get the title deeds for the house they are buying.
“You will find locals, instead of using a middle man, go to a police station, sign an affidavit about the house for sale, exchange cash, and the deal is done.
“I used to watch people putting up photos of their homes to let, buy or sell on noticeboards in spaza shops or at the train station. This was the township property portal.
“It was where I got the idea to create a township property portal that is phone-friendly for locals to buy and sell their properties.”