The swallows are back…give them a nest
This article delves into two lucrative avenues in the property market – short-term lets and longer-term lets to students and young people.
With international arrivals figures back to pre-Covid levels (and the soaring demand for student accommodation), Paul Stevens of Just Property asks whether it is time to reconsider buy-to-let and offers a guide to maximising returns.
The South African real estate sector has been receiving increasing attention, especially in the buy-to-let market. With the continent’s breath-taking landscapes, vibrant cities, and burgeoning opportunities, there is no better time to invest in property. This article will delve into two lucrative avenues in the property market – short-term lets and longer-term lets to students and young people.
Short lets: tapping into Airbnb opportunities
The Tourism Surge
Recent figures released by the Western Cape tourism, trade, and investment promotion agency, Wesgro, show an uptick in tourism arrivals, particularly in the Western Cape.
“International two-way passengers remained strong between January and June 2023, reaching 1.4 million, exceeding pre-pandemic levels by 104% and growing by 76% year-on-year.
“The 2022/2023 season also welcomed double the number of ship calls compared to the last complete season,” said Wesgro, the Western Cape government’s official tourism, trade, and investment promotion agency.
A property goldmine
Stevens, CEO of Just Property, believes this offers embattled South African homeowners an opportunity to make extra income by listing their properties on platforms like Airbnb or buying properties to rent them to tourists.
“The short-let market is flourishing with tourists keen on immersing themselves in local experiences and preferring homely accommodation over traditional hotels.
“For property owners, this presents a win-win situation. Not only can they earn a substantial income from short-term lets, but they also keep their properties well-maintained and ready for use whenever they wish,” says Stevens.
By investing in sought-after areas and listing on platforms like Airbnb, homeowners can earn impressive returns, leveraging the consistent influx of tourists into the country.
Various sources report that last year, from January to September, newly registered Airbnb hosts in South Africa earned more than R115m.
“The current property landscape can be described as a buyer’s market, so there are good investments.
“Now is a good time to get in touch with a property professional who can advise you and help you find the perfect house or apartment that will allow you to take advantage of the influx of travellers during our summer season,” said Stevens.
Longer lets: focusing on students and young professionals
The housing shortage quandary
In January 2023, the Department of Higher Education and Training noted a shortage of 400 000 student beds in South Africa.
“This represents another investment opportunity, and developers from small-scale property investors (including YouTuber Caspar Lee) to South Africa’s largest property company (Growthpoint) are filling some of the gaps,” says Stevens.
“While TVET and rural colleges are hardest-hit, there is also a scarcity of safe, affordable, and convenient accommodation in university towns like Cape Town, Stellenbosch, and others that have seen a rise in the student population.”
Not only students are struggling to find accommodation.
Stevens added, “There is a glaring lack of rental properties available to young professionals, especially in areas close to employment hubs. This presents an unmissable opportunity for property investors.”
Why invest in student and young working-adult housing?
Steady demand: With tertiary institutions attracting local and international students, there is a constant demand for accommodation. Young professionals starting their careers in urban hubs also need a convenient place to stay.
Stable income stream: Unlike short-term lets that might face seasonal variations, longer-term lets to students and professionals ensure a consistent rental income, often secured by a year-long contract.
Capital appreciation: As demand surges and supply lags, properties in university towns and urban centres are likely to appreciate over time.
Stevens notes, “Students and young professionals seek convenience, safety, and connectivity. Properties that cater to these needs will always be in demand.”
Venturing into the long-term rental market to capitalise on this opportunity
• Focus on properties close to universities, colleges, and city centres.
• Ensure safety features are top-notch, given the concerns many young people and their parents might have.
• Incorporate amenities that appeal to the younger generation, like Wi-Fi connectivity, study spaces, and communal areas.
The South African property market offers lucrative opportunities, whether the short-term allure of tourist-driven rentals or the steady, long-term appeal of student and young professional housing.
As tourism continues to burgeon and educational institutions draw in rising numbers of our youth, investors can make their mark in the buy-to-let segment.
“Whichever route you choose to follow, make sure that you bring in a property professional who can steer you to the right property and help you vet tenants, draw up binding rental agreements, and manage the property when you are not able to,” Stevens concluded.
For more information on Just Property, please visit www.just.property or call (087) 058 3333. Follow Just Property on Facebook https://www.facebook.com/JustPropertySA/
and Twitter https://twitter.com/Just_Property
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