Rental apartments are stealing market share from Sectional Title Sales 

A combination of financial pressures, changing mindsets and dramatic urbanisation is causing a major shift in the South Africa’s property sector.

There has been a noticeable flurry of activity in the rental market of late and according to some property experts, the swing away from buying to renting a home is here to stay. Here are three reasons why.

Money matters 

It is now more affordable than ever to rent rather than to buy thanks primarily to escalating interest rates and rising inflation. Current economic uncertainty has been exacerbated recently by things like the ongoing load-shedding saga, weak employment growth, especially among the youth, and rising petrol prices.

According to Greg Blend, Director of Africrest Properties, all these factors are making South Africans weary to commit to a life-long mortgage.

‘There has also been very little real capital growth over the last several years, especially in the Gauteng residential property market, and well-informed individuals are therefore choosing to rent and invest their capital in other asset classes offering more growth,’ he says.

Millennial matters  

Just like in other parts of the world, our perception of homeownership is changing. South African millennials are now the main property buyers, and they tend to have different needs and wants. Buying a property was a natural step, but now over half of the adults under the age of 40 are expected to live in private rented accommodation by 2050.

For a start, an bad jobs market and no guarantee of a decent-paying job is making it more difficult for young workers to secure credit, especially home loans. However, not being able to get a leg on the property ladder isn’t necessarily a bad thing in their view.

For most millennials, renting is a lifestyle choice, enabling them to enjoy independence and freedom without having to worry about extra costs like solicitors’ fees, tax, and maintenance costs that come with buying and owning a home.

Renting in an estate or complex also means that the tenants get to enjoy the security and amenities with the flexibility of long- or short-term tenancy periods and without having to fork out hefty levies.

At Africrest’s Landmark development in Ferndale, for example, residents of the six-story, apartment building containing 411 apartments, will be able to enjoy a resort-style swimming pool area, lavish work-from-home facility with zoom pods and lounge area, and huge gym.

‘Although sectional title developments have been the norm in South Africa, the relatively new Build to Rent concept has many advantages. Having one owner of the entire estate for example ensures that residents receive the best service possible and do not need to rely on body corporates to make decisions. At Africrest for example, we can ensure that all residents live in a noise-free, safe environment as they are able to control the entire estate,’ he adds.

Urbanisation matters  

Renting also provides an opportunity for millennials with limited finances to access trendy and sought-after areas of town. It enables them to assess the expenses, transportation, and general atmosphere of a neighborhood before committing to a long-term financial obligation, which may be unaffordable now. Moreover, in case the highly praised hip urban art district fails to meet expectations, it is hassle-free to relocate.

Bend’s group has successfully transformed office spaces, such as the Apollo in Johannesburg, into stylish apartments located in the heart of the city. These living spaces offer convenient proximity to workplaces, medical facilities, shopping centres, restaurants, and coffee shops, making them an ideal choice for middle-class South Africans and millennials seeking to reduce their cost of living amidst the struggling economy.

Opting for these compact residences can help reduce commuting time to offices and shops, as well as provide better access to transportation links. This growing demand for lock-up-and-go accommodations in central city nodes is driving urban revitalization and bolstering the residential property market in urban areas.