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Pillars of Justice

The rental market is experiencing a surge, providing a lucrative opportunity for rental investors

The rental market is experiencing a surge, providing a lucrative opportunity for rental property investors. Rental rates have reached their highest levels in years, with year-on-year growth reported to be the best since 2017. Seeff Property Group indicates that in certain areas, such as Century City in Cape Town and Melrose and Illovo in Joburg North/Sandton, investors are seeing impressive returns ranging from 9% to 19.5%, surpassing inflation rates.

Cape Town, in particular, is witnessing a high demand for luxury rentals, attributed to a stream of semigration. Rental agents report rentals as high as R120,000 per month in Constantia. The city's premier markets have rebounded to pre-pandemic levels, with a shortage of available properties. The anticipation of a busy tourist season and continued semigration is expected to further drive demand in 2024.

In Gauteng, areas like Melrose and Illovo are sought after, offering good rental investment opportunities, with returns reaching up to 19.5%. Suburbs like Centurion also present opportunities, with returns of up to 10% on two-bedroomed townhouses. In KZN, coastal areas like Pennington and Scottburgh are attracting city dwellers seeking a quieter lifestyle, leading to a rise in rentals.

While property sales may be slower in some regions, the rental market is booming. The trend of semigration is influencing rental choices, with more families opting for complexes to reduce costs and enhance security. The demand for rentals is driving landlords to build multiple dwellings on properties for quicker returns.

In Cape Town's popular suburbs, property prices vary, offering options for different needs and budgets. The Southern Suburbs are increasingly popular for families, with heritage homes priced around R4.95 million and modern apartments at R2.999 million. The Atlantic Seaboard, known for its coastal location, features family homes for R5.95 million and modern 3-bedroom homes for R7.85 million. Rentals in these areas range from R12,000 per month for a studio apartment in Tamboerskloof to R95,000 per month for a 3-bedroom home in Tamboerskloof.

Overall, the rental market is a thriving sector, providing diverse opportunities for investors and a range of housing options for tenants across various regions.

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