The Covid pandemic has necessitated a number of key shifts in the needs of tenants says Seeff Property Group.
Just like home buyers, tenants are saying that if they have to be largely confined to their homes and work from home, they prefer a house with views of the garden, mountain or ocean. While bigger apartments with space to work from home is sought, demand remains under pressure for holiday apartments.
Demand swings from inner city living
Craig Watchurst, a rentals agent for Seeff CBD and City Bowl said that demand is shifting from areas such as the CBD which were highly desirable to live close to places of work and to avoid travel time and petrol costs.
Remote working means many potential tenants are now moving to homes where they can have a view of the mountain or ocean rather than looking at buildings all day.
Landlords who own new development stock and were holding out for higher prices have missed out on the few potential tenants who were in a position to still rent, he said.
Suburban homes in high demand
Echoing the residential homebuyer trend where there has been a notable shift to the suburbs or bigger properties, Seeff is seeing a similar trend which explains why Cape Town’s suburban areas have a lower vacancy rate according to the latest TPN Vacancy Survey.
Jacqui Bush and Sonya Garisch, rental agents for Seeff Southern Suburbs said their rental markets have been exceptionally buoyant since mid-2020 with several record months. In Constantia, Newlands and Tokai demand currently exceeds supply in certain price bands.
Generally, if a property is priced correctly it will be let within the first few weeks. For the general rental market, free standing family homes with a garden and swimming pool in the R20,000 to R35,000 range are in demand.
Anneke Van Rooyen, rentals manager for Seeff Durbanville and Welgedacht said that it is no surprise that Cape Town’s northern suburbs have the lowest vacancy rate of just 5.1% according to the latest TPN Vacancy Survey.
The northern suburbs have always been a source of quality accommodation at reasonable prices and vacancies are often as a result of high landlord expectations. There is, however, some oversupply such as developers who held out for higher rentals.
Sea view properties still hot
Vivien Adler and Barbra-Ann Briner, rental agents for the Atlantic Seaboard said the area continues to attract high demand for rental accommodation because everybody wants to live here, but rental rates will remain under pressure as a result of the Pandemic and economy.
Landlords who are still resistant to price change risk extended vacancy periods because it is expected that the Pandemic will continue to overshadow the economy and property market for most of this year.
There is an opportunity to fill rental properties. The team is currently seeing strong demand, boosted by transient tenants moving from other provinces. Most in demand are properties in the R20,000 to R30,000 per month range.
The market below R20,000 is exceptionally busy but there is low stock, Seeff said.
Affordable rentals sought-after
Bush and Garisch noted that most of their landlords have either not increased or reduced their monthly rentals to keep their properties occupied. Vacancies are often as a result of landlords who are still not open to price counselling, not just for top end priced but also mid-ranged properties.
Across most areas, the lower price ranges are most in demand. In Cape Town’s Southern Suburbs and the Constantiaberg area, there is now a shortage of stock particularly in the R15,000 to R35,000 per month range according to the agents.
For the Cape Town CBD and City Bowl, it is the R9,000 to R12,000 per month range for apartments and R18,000 to R25,000 for houses.
Tenants are downscaling
Van Rooyen said that there are instances where tenants are downgrading from big houses to townhouses and apartments in the northern suburbs of Cape Town.
In the CBD and City Bowl, there is an increase in tenants sharing houses and flats according to Watchurst. Prior to lockdown, tenants were renting one-bedroomed apartments for around R12,000 per month.
With the drop in prices, tenants can now share a two-bedroomed apartment for roughly the same price, effectively reducing their rental costs by 50%, he said.
Short-stay and holiday accommodation demand remains low
According to the latest TPN Tenant Vacancy Survey, the Atlantic Seaboard has a 24% vacancy rate followed by the CBD at 17%. Much of this is attributable to the significant pressure on the tourism and events and exhibitions market.
The consequence of little to no business in this sector means that most of the short-stay and Airbnb stock is still largely in the long-term market while landlords wait for tourism to recover according to Craig Watchurst, a rental agent with Seeff City Bowl.
School and university zones demand “explodes”
With most schools reopening, many family tenants are looking for homes close to good schools as well. Marinda Bienz and Sam Heuvel noted that there is a shortage of supply of basic three-bedroomed houses in the Southern Suburbs school zones such as Rondebosch, Claremont and the upper areas in the R17,000 to R22,000 per month range and apartments in the R15,000 to R18,000 range.
Universities are also opening and there is now unprecedented demand and limited properties available close to universities such as the University of Cape Town (UCT). The highest demand for student accommodation is either apartments or larger houses where students share.
Country lifestyle now preferred
Areas which are peripheral to the urban areas are seeing high demand not only for properties for sale but also to rent. This is driven by people looking to escape to more tranquil surrounds so that if they must stay home, they can at least enjoy a lifestyle within their immediate surroundings, said Stephan Cross, sales manager for Seeff Hout Bay.
Marinda Uys, rentals manager for Seeff across the Boland, Winelands and West Coast areas confirm that rental accommodation is in high demand in the area. Seeff Pretoria East area is seeing a similar trend in terms of high demand for homes in secure lifestyle estates as well as boomed off areas.