Demand is currently highest for lower-priced rental properties in Gauteng, with more pricey stock being slower to move. This is according to Jawitz Properties’ Eloisé de Stefanis, Gauteng regional manager, rentals and property management.
“Activity is mostly in the lower price range of the market, across the board,” she said. “At the higher-end, the corporate relocations sector continues to secure leases but demand has slowed, with the possibility of an oversupply of stock in the future.”
De Stefanis said demand had increased in the new property development bracket due to competitive pricing, adding pressure on existing overpriced renewable or re-lettable management stock.
“This is due to repeated rental escalations above market-related levels over the past two to three years of 8% to 10% per annum,” she said. “Current rental escalations in Gauteng are linked to CPI and should be no more than 8%, but are more realistically hovering around 6.5% to 7.5%.”
Gauteng tenants are resisting higher lease fees and rentals, placing pressure on landlords to push for a reduction in procurement and renewal fees. And the situation will not get easier next year as the regulations in the Sectional Title Management Act and Community Schemes Ombud Services Act come into force, such the minimum reserve fund for maintenance and repairs in all sectional title schemes and ombud levy.
But landlords wanting to pass on these costs to tenants may not have much luck as current market conditions provide very little wiggle room.