Aerotropolis KZN – AerotropInvest for work & play

You’ve just done your annual tax return and you realise how much you spent on hotel accommodation over the period of a year … time for a drastic change, you think. So, what are the options? Reduce your business trips to Durban? Not likely, as business is finally growing, especially now with all the development on the cards around King Shaka International Airport (KSIA) and Dube Tradeport – Aerotropolis KZN, they call it. Look for cheaper hotel accommodation? Done that already. You think you’re running out of options when suddenly the penny drops … what about investing in a rental property?

Brilliant idea! Especially seeing that Durban offers the best rental returns in the world – according to the 2017 Property ROI Index from the London-based online real estate agency Nested. Whoa, you think … but how can I achieve that? Well, firstly, by your company investing in a property, and then ‘renting’ it out to company members and staff whenever they travel on business – that way it’s a genuine, legitimate business expense. And, for when you, your company, or your colleagues are not using it, there’s Airbnb, but any other well-organised rental service should give much the same return. According to the Index, which compared traditional rental returns (having a fixed tenant) to those that could be achieved with an 80% occupancy for short-term rental, a Durban home owner could recover their bond within 18 months compared to 14 years through regular rentals. Seems almost impossible, you think, but definitely worth considering.

Ask any Durbanite and they’ll tell you that nothing beats Durban as a place to call home – with its golden beaches, warm Indian Ocean, subtropical climate and relatively mild winters. But it’s not just the locals who think this – according to the 20th Mercer Quality of Living report, released earlier this year, Durban was ranked as South Africa’s most liveable city. And a ‘most liveable city’ surely has much to offer both residents and visitors. Data from Air bnb indicates that typical guest arrivals to Durban number around 40,000, are from over 100 countries, and that the typical income earned per host is R20,000 per annum for an average of 13 nights booked. That might not seem like much but it’s an average so you could up it significantly with some clever online marketing, and it’s in addition to the days the property will be ‘rented’ by the company.

Clearly not all rental properties are considered equal, with ‘location, location, location’ being of paramount importance. While leisure guests will primarily be looking for proximity to the beach, local attractions and shopping, business travellers are more interested in easy access to the airport, high-speed internet, well-designed work spaces, easy access to the city and the other important business districts, and convenience. And the new aerotropolis offers all these in spades. Aerotropolis KZN, which centres around Dube Tradeport and King Shaka International Airport, is set to become one of the major trade and business hubs in sub-Saharan Africa. With its development area extending from Gateway and uMhlanga in the south to Ballito and Compensation in the north, this region is bound to offer investors huge opportunities.

Choices, choices … so where will it be?

Durban is expanding to the north at an incredible rate, so the centre of gravity for industry and commerce is also moving north. And along with that development comes improved transport infrastructure, so the big decision you need to make when deciding on where to invest in a property for business trips is to balance distance from KSIA and the traditional city centre – bearing in mind that, over the next few years, the bulk of your business may progressively move further north.

The Gateway and uMhlanga areas are practically the de facto new CBD, with the added advantage of easy access to central Durban and the airport – and the bonus of proximity to the beach and fabulous sea views along with high-end shopping, restaurants and entertainment – so a property here could bring in some extra income for the company through leisure rentals. And for apartment living, you’re spoilt for choice. Le Boulevard, a modern residential apartment block in the heart of uMhlanga Rocks and centrally located between the Gateway Theatre of Shopping and the popular uMhlanga beachfront and promenade, is priced from R999,000. It’s ideal for that quick early morning run before work or a dip in the ocean after a busy day of meetings and negotiations.

Currently under construction and set for occupation in October 2019 is Summer Park Umhlanga at prices ranging from R1.36 million for a one-bedroom apartment to R1.77 million for the two-bedroom option. Its location on the Ridge means easy access to the region’s all-important business hub, transport links, and also shopping, restaurants and entertainment, so it’s great for work, but also convenient for leisure. Another fabulous apartment complex being developed on the Ridge is Central Park, which will include a hotel and a variety of world-class facilities, as well as fabulously appointed one-, two- and three-bedroom apartments. It is being developed in three phases, with Phase 2 currently under construction. All the one-bedroom apartments have been sold, and prices start at R1.45 million for a two-bedroom, one-bathroom unit. Keep your eye out for Phase 3.

Inland from uMhlanga Ridge is Cornubia, a mixed-use urban settlement area that is transforming the landscape with the huge Cornubia Regional Shopping Centre, mixed commercial and industrial development, and a host of residential opportunities from R600,000. While these are still in the planning stages, they are worth considering, as buying off-plan offers the added benefit of no transfer duty. Conveniently situated smack in the middle of the Northern Urban Development Corridor, and a mere seven kilometres from KSIA, these properties are particularly well positioned for short-stay business travellers. A little further north is the Sibaya Coastal Precinct, which is probably the most conveniently situated: super-close to the airport, and not far at all from the city. The spectacular coastal landscape and beautiful beaches are a bonus, which means supplementing your income from leisure tourism is a real possibility. Conceptualised as a ‘living, vibrant community’, it will include commercial, retail and residential areas, and is certainly an area worth keeping an eye on as it is in the early stages of development, so investment opportunities are bound to pop up – it’s the early bird that catches the worm, after all.

The Ballito region requires little to no introduction. It is an area that has grown from a sleepy coastal resort to a thriving retail, residential and commercial hub – from lifestyle estates and luxury resorts to eco developments and aesthetically pleasing apartments – so it’s well placed for business travellers. It’s a bit further from central Durban, but closer to the airport, so you would need to balance that out. If you’re looking for lush, natural surroundings, then you can’t go wrong with Elaleni Coastal Forest Estate on Sheffield Beach. The Lush Condos are due for completion in mid 2020, and sales are already going strong. Studios start at R1.4 million, one-bedroom units at R1.8 million and two-bed apartments at R2.4 million. Most of the studios and one-beds have been sold, but you may be lucky to pick up a resell. What’s great about this development is that they will have a rental management pool, so the chances are good that you will be able to cover your investment with ad hoc rentals. An additional benefit is Elaleni’s commitment to sustainability, with solar energy, grey water treatment, harvested water and waste recycling the norm.

If you’re looking for something a little further north, especially if your business takes you to the industrial and business hub of Richards Bay, then New Salt Rock City could be what you are looking for. Located between Salt Rock and Ballito, this multifaceted development is set among rolling hills, with sea views and conservation areas as well as beaches on its doorstep. Included in its residential development are freehold homes as well as apartment living, which may be a little pricey at R1.9 million and up, but it could be a good longterm investment, as it is still in early development stage. It’s a little further from the airport – about 25 kilometres – but the traffic from the north is not as heavy as that from the south. Of course, part of the construction process is the laying of super-fast fibre, so business communication will be a breeze. Bottom line – when it comes to looking for an investment apartment, location, corporate facilities and transport and communications infrastructure need to be top of mind, especially if you want to capitalise on the growing business rental market. And – for the days your business is not utilising it – it’s the comfort of that additional rent that will lessen the risk of the investment. And it’s not just leisure guests who prefer apartments over hotels. More and more business travellers are shunning corporate hotels in favour of the independence and homely feel of a rental apartment.

Remember that the whole point of growing your business investment portfolio is to alleviate the burden of costly hotel accommodation while creating a nest egg for the future, so attention to detail is important. Most apartments don’t come decorated, but inquire whether the developer offers this service, or find a professional decorator who understands the rental market.

Before signing on the dotted line though, be sure to check the rules and regulations regarding rentals. Some developments specify a minimum rental period of three or six months, while – at the other extreme of the convenience spectrum – some manage a rental pool for owners. Other alternatives include a dedicated short-term rental agency, or good old Airbnb, which has shown good returns for well located listings.