Just like with any other market, almost night, the rental sector has been massively impacted by the Covid 19 pandemic. These unprecedented market shifts have made the Johannesburg rental market a viable investment opportunity.
The pros of living in Johannesburg
- Johannesburg has one of the best climates globally, though it does tend to get cooler than other parts of SA in winter. But for the rest of the year, residents and visitors can look forward to warmth nearly every day, making it ideal for outdoor activity and nightlife.
- If you are a fan of thunderstorms and find beauty in the natural phenomenon, then Johannesburg is the place for you. Thunderstorms tend to hit in the afternoons, but the good news is that it only begins to get dark outside around 7 pm in summer and around 6 pm in winter.
- If you are looking for employment or searching for new beginnings, Johannesburg is one of your best options in South Africa. Not only is it the economic hub of the country, but there are more opportunities for entrepreneurship, growth and a higher salary bracket.
- You will be spoilt for choice when it comes to property. The City offers an array of family homes and options for smaller flats and outbuildings at fairly reasonable prices.
- Travel opportunities are plentiful as Johannesburg is close to fantastic safari opportunities, the famous Drakensberg mountains, and Cape Town is only a 2-hour flight away.
- Uber and Taxify will see that you are never left stranded. This, combined with a world-class public transport network, including the Gautrain in Pretoria, makes Johannesberg one of the most connected cities in South Africa.
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Although rental properties still remain a worthwhile investment, now more than ever, potential landlords need to do their research and seek professional advice.
Understandably, many potential buyers are cautious, but the dynamic conditions have created ideal conditions to implement a ‘buy low and sell high’ investment strategy for investors looking to take the risk. Although there is a surplus of available properties with lower rental yields, this is only a temporary market response due to the Covid 19 pandemic. Therefore, property investment should be regarded as a medium to long-term investment, not a short-term get rich quick scheme.
Many long term rental properties will revert to being short term leases once international, and even regional travel begin to normalise with the decreasing lockdown restrictions, which will, in turn, begin to stabilise the property market and increase property values. Therefore making this a brief window of opportunity for investment, especially in the Johannesburg rental market due to its increasing property developments.
The pandemic has also created a unique buyers market for potential investors with a wider variety of properties available, banks making finance more accessible and lower interest rates. A June 2021 report from Ooba indicated the year-on-year value of granted home loans had increased by almost 54% from June 2020, bank approval was up by 4%, and approval of 100% home loans from banks had gone up by 2% from the previous year.
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As the old saying goes, the trick to property investment is buying the right property in the right area. But it is not that simple as there are many factors to consider before jumping into the Johannesburg rental market.
The best place to start is with the local real estate agents in the areas you are interested in. They will have a better knowledge of the market, such as what potential renters are looking for and what they are willing to pay for accommodation. For example, a brand new one-bedroom unit with beautiful finishes and layout may not be as good as an investment as an older two or three-bedroom flat in an area that is appealing to young families. Of course, the same can be said of the opposite as well.
This means that doing your homework is crucial, and you need to look at all your options. Research each area to establish which types of properties are most popular and in-demand and what potential tenants are looking for in a rental property in terms of amenities and features. Lastly, appoint a reputable and experienced real estate agent. as appealings as I may seem, save a bit of money to find and manage your tenants. A rental agent would be better equipped with the resources to vet potential tenants better and handle the rental payments and overall management of the property.
Current Market Trends in Johannesburg
Many people are looking to move to Johannesburg looking for accommodation with gas stoves, backup power supply, and pet friendly. International buyers look for homes with swimming pools, but they are not a priority for most local buyers.
Many suburbs in Randburg, such as Fairland, Cresta and Blackheath, which are the most popular for investment, appeal to both up and coming young professionals and families. Therefore, potential investors should consider targeting either demographic.
Before the pandemic, young professionals would gravitate towards one or two-bedroom apartments with their lock up and go convenience, now are looking for more space. With more people working from home, many prefer to have an extra room to turn into a home office. Garages and storerooms are now also more appealing than they were before the pandemic.
For families, three bedrooms homes in a complex are the top of most potential tenants wish lists. These offer safety and security while still being close to amenities such as shopping centres, gyms and schools.
