Well-positioned properties expected to show improved rental returns

After the rise in property values in 2020 and 2021 caused by low interest rates, the signs are there that higher interest rates, inflation and the higher cost of living are culminating to negatively impact on property values. Rental yields, on the other hand, are showing improved growth as we see rental income and property values move closer into sync. So, where are the highest yields? Sectional title properties offered the highest rental yields at 10.18% in the fourth quarter of 2022 compared to just under 7% for freehold properties.

With that, increased demand for rental stock is expected to drive rental escalations. Nationally, rent escalated by 3.02% in the third quarter of 2022, increasing to 3.56% in the fourth quarter.

In a changing economic landscape, understanding tenant risk has become even more critical in the current environment. In addition to staying abreast of market trends, property investors need to consider providing value-added services such as alternative power and water supply solutions to ensure properties are more attractive to tenants.

For the full report, download the Residential Rental Monitor 2022 Q4: https://bit.ly/3Li6t6c


TPN Vacancy Survey Report Q1 2024

Residential rental vacancies in South Africa have reached historic lows, with the national vacancy rate decreasing to 4.42% in the first quarter of 2024, the lowest level since 2016. This trend is driven by high interest rates making homeownership un…

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