Are high density apartments a good investment idea?

They may be small, but they are the solution to the demand for more accommodation in tight spaces, particularly within city CBDs (central business districts). There are many names for them including ‘tiny homes’, ‘apodments’, ‘micro units’, ‘micro flats’, ‘nano units’ and so on.

During Covid micro units (flats starting at 20m squared) were becoming less fashionable as people sought bigger living spaces that accommodated their work from home (WFH) lifestyle. They have, however, made a comeback.

Here we explore the reasons for this and why these small spaces are a good investment that are set to retain their value.

Small, but sought-after

Two years on from the start of the pandemic, it appears that tiny homes are still as important and popular as ever.

Perhaps not with those who have bigger families seeking a luxury country lifestyle, but they are appealing to the younger 20 to 30 something professional keen on tapping into the city buzz and who missed the watercooler office culture that was sorely lacking during the pandemic.

Micro units have popped up in Woodstock, Cape Town at 1 on Albert and it’s been reported that other developers were copying this idea too. They include the new green micro development, The Fynbos, in Cape Town’s Bree Street which also claims to be Africa’s first biophilic building. Apartments here sell for an affordable R890,400.

In Gauteng the Live Easy brand has proven a successful concept too. They’ve catered to those who would otherwise have shared a room or a small flat with their ‘nano units’ which start from 13m squared and offer affordable accommodation for those who want to live close to work.

Micro living spaces are not just something to be seen in the CBD either – developers are creating these types of spaces in townships too and they’re proving lucrative. According to town planner and land economist Professor Robert McGaffin, developers in places such as Delft and Khayelitsha are seeing returns of up to 20% in the first year.

Own pad vs. parent pad

It’s not just developers that are seeing the benefits. Smaller pads offer up an alternative for those who no longer want to live in their parents’ home or share with other flatmates.

They’re also easier and cheaper to maintain. Live Easy point out that living in nano apartments don’t offer up endless spaces that could result in frivolous purchases, and they also result in lower utility bills which will keep your monthly spend down.

Affordable smaller properties are also helping people get more easily on the property ladder as they don’t have to save up for a large deposit.

Tricks of the trade

If you’re smart about how you use the space, you can make smaller spaces work for you. Future buyers may be put off by smaller spaces, but there are things you can do to make tiny, high-density spaces look even bigger than what they are.

It’s all about using colour and shade, adding shelves and storage in clever spaces. Companies are increasingly designing pieces of furniture that can be used in multifunctional ways in small spaces.

For more on how to make your tiny pad look bigger than it is, check out our high-density décor guide.

WFH – an outgoing fad

In the long run, the property market has generally been a strong performer since, as the population continues to grow, land has become scarcer – particularly in city centres.

Even a small apartment in a high-density city centre is bound to keep its value as the demand for easy access to the city CBDs, particularly among the young, is maintained.

WFH is a fad that’s seeing a shift what with the advent of ‘hybrid’ working where companies are offering the compromise of part office/part WFH.

In such instances, location of the property (however small) will be key as those who cave into the hybrid working demands. Micropods are said to become popular among those who’ve moved out to the country too as they see them as affordable, centrally located ‘crash pads’.

Geo-political problems which are forcing the cost of living up are also set to influence people into wanting to stay close to office. After all the price of petrol, considering the current unstable world economic environment, is likely to only go up in price.