THE BACKROOM RENTAL MARKET
There is a significant growth potential of the property market within the Township. The size of the approximate R1 billion informal back room rental market across South Africa’s townships stands at about five to eight million rooms and is growing every year. The informal room rental business is ushering in a new generation of property entrepreneurs and micro-developers.
According to the DAG (Development Action Group), developments in the townships include up to 10 units and are often double-storey, varying in size from about 10m² to about 40m². Rents range between R1 500 and R3 000 upwards.
The units mostly service gap market dwellers – those who earn between R3 500 and R15 000 a month.
The DAG says small-scale rental housing is certainly changing the character of South African cities and helping to solve the accommodation crisis. “Small-scale rental housing offers wide ranging public benefits and significant entrepreneurial opportunities to support economic recovery, however the informal and unregulated character of the market poses some risks.” The formalisation and development of the township backyard rental market is crucial to avoiding poor financial control, issues surrounding tenant credit history, failure to impose digital payments and general maintenance/upkeeping of premises. The success of the affordable property market requires entrepreneurs to be astute and regularised.
TAKING A GROWTH SNAPSHOT AT THE RESIDENTIAL MARKET
The average value of registered residential property sales in five major South African townships has seen a significant rise over the past decade. Lightstone (property market intelligence) analysed residential market indicators in five randomly picked townships to provide a snapshot of homeownership patterns from 2013 – 2023. The townships in observation where — Mamelodi, Thembisa, Soshanguve, Umlazi and Khayelitsha.
The increase in average value of registrations has been most pronounced in Thembisa, moving from R284 217 in 2013 to R717 169 in 2023, and Mamelodi, which went from R232 972 in 2013 to R687 469 in 2022, marginally higher than the average recorded in 2023.
The average household income is highest in Umlazi at between R11 000 and R22 000 a month compared to an average of R5 500 and R11 000 a month in the other four townships, while Soshanguve has the most number of resident adults at 430 641, followed by Thembisa with 329 517 and Mamelodi at 327 903.
SOURCE: LIGHTSTONE PROPERTY
