Cape Town's Northern Suburbs Faces Rental-Market Squeeze

The shortage of available rental stock has led to a very competitive market

Cape Town's Northern Suburbs has been experiencing a significant squeeze in the rental market as demand for rental properties in areas like Durbanville, Bellville, and Brackenfell has skyrocketed in recent years, leading to a notable shortage of available stock and rising rental prices. According to Rowan Alexander, Managing Director of Alexander Swart Property group, the shortage of available rental stock has led to a very competitive market where properties in good condition and realistically priced are often snapped up within days of being listed – if not sooner. “Agents are reporting multiple applications for each property, often on the day of listing, with potential tenants even offering above the asking rental price to secure a desirable property. This spike in demand has also precipitated new development, especially in the Durbanville area where there are still available tracts of land," he says.

Agents are reporting multiple applications for each property, often on the day of listing, with potential tenants even offering above the asking rental price to secure a desirable property. This spike in demand has also precipitated new development, especially in the Durbanville area where there are still available tracts of land.

Rowan Alexander, Managing Director of Alexander Swart Property

Alexander notes that the strength and growth of the rental market in the region is clearly evidenced by the success his firm has seen in a very short time at the recently completed Wheatfields Estate development in the suburb of Groot Phesantekraal Estate, where landlords saw rental returns of 8.2% in year one and 9.1% the second year. “Additionally, property owners at the estate are also enjoying capital appreciation of around 8.5% per annum which is a respectable return in any market and, with properties accessibly priced between R3m and R4m, it’s an affordable and lucrative option for most investors. And, as 40% of the buyers in the first phase are investment purchasers, they will already be confident that they have invested in the right property and area.”

Rental Boom

Wheatfields Estate, the first residential project at Groot Phesantekraal Estate, was launched for sale off plan by Rabie and Trinity at the end of 2021, and comprises 152 own-title homes, of which around 110 are already occupied. “There are only 12 unsold homes and a few still under construction but these are due to be completed within eight months. The next development in the precinct, Klein de Koning, is a pioneering project for the area and is due to be launched for sale off-plan this month.

“Klein de Koning consists of 48 contemporary and distinctively designed apartments set within a secure gated enclave with lush, landscaped gardens, communal entertainment areas and a swimming pool. With 12 simplex units and 36 duplex apartments, it offers buyers a sophisticated, low-maintenance lifestyle which will be highly sought-after in the rental market.”

Situated in the scenic Durbanville wine region, Groot Phesantekraal is poised to become the newest residential hot spot in the city with the ongoing development integrating commercial-, retail- and educational components into one privately managed precinct.

Amenities will include the recently opened award-winning Curro Durbanville High School, the planned Stadio tertiary education campus which is scheduled for completion at the end of 2025 and the Groot Phesantekraal Regional Shopping Centre which is currently under construction and scheduled to open mid-2025.

An additional drawcard is the precinct’s proximity to the Winelands and the region's lifestyle amenities such as wine estates, running trails and cycling routes as well as the Cape Winelands Airport with plans to transform it from a modest airfield to an influential commercial and aviation centre.

Factors Behind Growth

Alexander attributes the boom in the rental sector to several compelling factors, including:

• Migration from other provinces: Cape Town has seen a significant influx of residents from other parts of South Africa with data from Statistics South Africa showing that the Western Cape has experienced the highest net migration of any province and continues to do so.
• Affordability compared to other popular areas: While still offering excellent amenities and quality of life, the Northern Suburbs generally provides more affordable housing options compared to other popular areas, such as the Southern Suburbs and the Atlantic Seaboard. This attracts both young professionals and families looking for value for money.
• Proximity to business hubs: With the growth of business parks and office developments in areas like Tyger Valley and Century City as well as in the Winelands, the Northern Suburbs has become increasingly attractive for those seeking to live close to work.
• Quality of life: The Northern Suburbs is known for its good schools, shopping centres, and outdoor/green spaces, making it ideal for families and individuals seeking a balanced lifestyle.

“Real estate investment remains one of the most stable investments, especially during challenging economic times when other investment options tend to be more volatile, and this is especially true for the Western Cape,” says Alexander. “According to the latest TPN Rental Monitor report, the Cape continues to outperform other provinces in terms of rental payment performance, with 86.7% of tenants in good standing as of Q4 2023 (TPN Credit Bureau, 2024).

This high percentage of reliable tenants has made the region increasingly attractive to investors and landlords, which has been especially notable in Cape Town's Northern Suburbs during the past two years,” he concludes.