June 18, 2024

The Bolton surpasses rental market trends

4 min read

In a time when South Africans are navigating the challenges of a rising cost of living, The Bolton in Rosebank stands out as the fastest selling development in the region, boasting an impressive over R240 million in sales.

This remarkable achievement comes as the rental market takes centre stage as a reliable housing expenditure option, showcasing a declining annual average vacancy rate and a significant 2.68-point improvement in the TPN Rental Market Strength Index for the first quarter of 2023, compared to the final quarter of 2022.

According to the TPN rental monitor, published by the TPN Credit Bureau, “Property owners can expect rental growth to continue its upward trajectory in 2023 and 2024 if interest rates remain high and until new supply volumes enter the market. This is likely to also be reflected in single-digit vacancy levels for the first three quarters of 2023.”

Investing in the rental market naturally comes with a series of potential concerns. Selecting the right location is a choice that can significantly influence the investment’s profitability, consistently attracting reliable tenants, and ensuring there are always tenants in place. There is the lingering apprehension of whether they will meet their payment obligations punctually and consistently. But this rapidly evolving economic landscape gives way to a residential property investment in Rosebank, which offers a stable and secure option for investors, underpinned by solid growth indicators and a strong tenant standing.

Location remains at the heart of real estate investment decisions, and it significantly influences rental yield. It’s true that popular, well-established locations are often in high demand, which can inflate property prices and thereby affect return on investment.

Exploring up-and-coming or growing areas can provide lucrative opportunities. These locations can accommodate the overflow from prime locations, often becoming sought-after areas – such as Rosebank, which is rapidly becoming a node that’s increasingly appealing to professionals working in nearby Sandton and other neighbouring districts.

“Rosebank provides a unique blend of commercial, retail and quick transport links. The area offers a vibrant and convenient lifestyle, and this is what you want as an investor. Its rich amenities, excellent infrastructure and ongoing development projects are transforming it into an attractive destination for both living and working. Notably, rentals for a one-bedroom apartment can command up to 8.5% more than those in the neighbouring Hyde Park,” explains Johann du Plessis, development director at Feenstra Group.

Talking around major concerns for investors of whether renters can pay in time: The good standing ratio of tenants, a key metric in assessing the attractiveness of a residential investment, remains impressively high in Rosebank, providing a secure and predictable income for property owners. In the second quarter of 2023, Rosebank demonstrated a good standing ratio of 88%, a testament to the area’s stability and the appeal of developments. These strong statistics indicate Rosebank’s robust rental market and affirm its reputation as a reliable investment option for savvy investors seeking secure returns.

There are not many opportunities where you can invest in a development and gain a rental income from day one. It normally entails a tedious and time-consuming process of finding an agent to market your unit, looking for a tenant and finding a proper agreement to use – whereas the Feenstra Group has taken an existing rental-only development and turned it successfully into an opportunity to purchase as a sectional title. This has allowed existing tenants to remain, and owners to gain a rental income from the date they take transfer.

Situated strategically within the bustling Rosebank hub, The Bolton – a fully tenanted, transformed residential space – has consistently sustained an annual average occupancy rate nearing 100%: a clear indicator of its enduring appeal among residents. Competitively priced with over 75% of the units already sold, The Bolton offers an attractive entry point for investors, requiring just a R10 000 deposit to secure your investment.

When considering the demand dynamics in the Rosebank rental market, it’s worth noting that two-bedroom apartments hold significant appeal for renters. These properties strike an ideal balance between space and affordability, catering to a wide range of tenant profiles including small families, professionals sharing accommodation, or individuals seeking extra space for home offices.

In the sought-after development of The Bolton, studio apartments start at R999 000, with one-bedroom apartments for R1 099 000, and two-bedroom apartments priced at R1 499 000. Monthly bond repayments range from R10 084 to R15 131. Current rental rates are around R7 098 for studios, R8 026 for one-bedroom units, and R14 882 for two-bedroom apartments. The estimated gross annual yields are attractive too, with studios at approximately 12.58%, one-bedroom units at 12.91%, and two-bedroom apartments at an attractive estimated gross annual yield of 12.94%. The aforementioned figures include an exclusive rental assistance package ranging from R18 720 to R150 900.

“As it stands, even with recent market shifts, your property’s capital appreciation and rental potential will ‘pay you back’ over time, not just your debt – and you’ll earn a rental income from day one to help settle your monthly bond,” adds Du Plessis.

Investors are seeing real, tangible opportunities to realise steady returns. The strengthening rental market, coupled with a solid good standing ratio of tenants, pave the way for a promising and secure investment. With the current climate favouring the rental sector, now could be as opportune time as any to strategically position oneself within this buoyant market.

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