What You’ll Get For Your Money Renting A Home In South Africa
Foreign buyers are not the only ones finding great value in South African property. So are international executives, professionals and diplomats who rent homes while on assignment there.
Real estate companies are struggling with rising vacancies and unpaid rents in South Africa, where growth is forecast by the central bank to slow to less than 1 percent this year, according to Bloomberg.
“The drop in the value of the rand has made it almost ridiculously inexpensive for those earning in euros, pounds or dollars to rent property here, while also enjoying a relatively high standard of living,” says Andrew Schaefer, managing director of property management company Trafalgar, in a press release.
Trafalgar manages more than 65,000 residential properties in 1200-plus developments and estates in South Africa’s main cities.
Rental yields were less than 8 percent in 2015 across the company at Growthpoint, South Africa’s largest property company by market value, CEO Leon Norbert Sasse told Bloomberg. The company could probably borrow at rates of about 9.5 percent, Sasse said.
South African companies will need to increase rentals to boost yields that “continue to remain reasonably low for premium-rate property in all sectors,” said Henry Playne, head of capital markets in South Africa for real-estate services firm Jones Lange LaSalle Inc., in a Bloomberg interview. “There will be a lead time of anywhere from six to 12 months where sellers have to wake up to the new normal that their properties’ yields must increase.”
South Africa is increasingly sought after by expats from all over the world, and the rising demand for the top-end rental properties is creating some excellent investment opportunities, Schaefer said.
These are expanding, he said, in line with South Africa’s reputation as a base for international corporations seeking to do business in Africa.
Top choices of location include the Sandton central business district and surrounding area, Pretoria East and areas north of Durban around the Dube TradePort at King Shaka International Airport.
Security is a priority, Schaefer said. Foreign corporate and professional tenants are looking for upscale apartments and estate homes.
How do SA residential rents compare to other cities?
Rents compare favorably with similar properties in and around other major cities around the world.
Quality two- and three-bedroom apartments in exclusive Johannesburg suburbs such as Hyde Park, Atholl and Strathavon rent unfurnished for between 15,000 and 20,000 rand a month ($950 to $1,263 US).
Fully-furnished luxury two- and three-bedroom apartments and penthouses in Sandown, Morningside, Hyde Park and Illovo rent for between 20,000 rand and 40,000 rand ($1,263 to $2,526 US) a month.
By contrast, the average monthly rent for a much smaller (one-bedroom) furnished apartment in an upscale area is currently $3,304 in London, $3663 in Paris, and $3800 US in New York, according to the Expatistan Cost of Living Index, according to Schaefer.
Expats with families
Expats with families prefer estate homes, he said. There are many three- and four-bedroom cluster homes with pools, garages and security available for rent in the suburbs close to Sandton for between $1895 and $3,158 a month.
Renting outside the city centers
Monthly rentals for luxury homes in golf estates east of Pretoria and north of Durban range from around $1579 up to about $4421 for furnished, six-and-seven-bedroom properties. Similar quality homes within reach of London in the U.K. would cost at least $6818 a month to rent up to $14,165. Upscale homes in the boroughs of New York City start at around $8000 a month and can go as high as $30,000 a month.
Extra costs associated with renting
If you are thinking of renting in South Africa, be aware that you’ll usually be asked for six weeks’ rent as a deposit in advance plus the first month’s rent and a non-refundable deposit, according to Expatica.
You may also be expected to pay a deposit for electricity and water, maintain a garden and hire a gardener. Gardeners charge around $12 a day and you’ll be required to provide breakfast and lunch. A live-in maid might be offered as part of the rental contract and that will cost around $154 a month.
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