Following a second cut in the interest rate as well as the curbing of the sharp upward trajectory of inflation, investor sentiment is cautiously optimistic and South Africans are once again looking to invest in real estate, according to Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty.
Geffen said that real estate is traditionally regarded as one of the most stable investment options.
With national rental vacancies currently lower than they have been in eight years and the repo rate slowing adjusting, now is an excellent time to enter the rental market.
“The trick is to do your homework and work with an experienced professional to understand which areas and property types are most sought-after," Geffen said.
Geffen breaks down the market in each area, sharing strengths and best investment options:
Cape Town: high-value market with strong long-term returns
According to Geffen, the property market in Cape Town is characterised by high demand and resilient property values, with some suburbs once again seeing double-digit price growth.
The Atlantic Seaboard, City Bowl and Southern Suburbs continue to attract both local and foreign investors however areas like False Bay and the Western Seaboard offer excellent comparative value with lower entry price points.
"For investors looking to buy on the Atlantic Seaboard or in the city, luxury apartments and short-term rental properties are ideal as Cape Town’s strong tourism industry along with a high number of corporate travellers ensure that short-term rentals yield high returns," Geffen said.
"Townhouses and flats in areas like Green Point, Sea Point, and Gardens are popular among young professionals and offer stable long-term rental returns. In the Southern Suburbs, freehold family homes that are secure and well-priced are in very high demand as are homes in secure developments."
Johannesburg: economic powerhouse with affordable housing demand
Johannesburg has robust demand in certain segments particularly for affordable and middle-income housing.
Geffen said: "The property market is known for its diversity, with growth areas emerging in suburbs that cater to working professionals. Areas such as Sandton, Rosebank, and Midrand show stable appreciation, while the demand for affordable housing has surged in suburbs like Roodepoort and Randburg."
In areas with high job density like Sandton and Rosebank, modern apartments are well-suited for investors who targeting young professionals while suburbs in Randburg and Fourways are popular with young families, especially first-time buyers.
Affordable and low-income housing in outlying areas, such as Soweto, offers high rental yields, as demand for these properties remains high due to urbanisation trends and housing shortages, according to Geffen.
Midrand – the growing hub between Johannesburg and Pretoria
Geffen said that Midrand which is located between Johannesburg and Pretoria has experienced rapid development and is emerging as a prime location for residential and commercial real estate.
Due to the proximity to business hubs and infrastructure investments, Midrand has attracted a large number of young professionals as well as new residents.
Waterfall City and Carlswald are seeing significant growth due to commercial expansion and lifestyle offerings.
"Apartments and sectional titles are especially popular in Midrand, particularly in newer developments near Waterfall City, which are well-suited to young professionals. Additionally, office and retail spaces are valuable investments, as Midrand’s business infrastructure continues to grow," Geffen said.
Pretoria: government and educational hub with stable growth
The real estate market in Pretoria has long been stable due to its status as the government centre and home to a large student population, making it the preferred choice for investors who are look for steady, long-term returns.
"With high demand for rentals in neighbourhoods near universities and government offices, Pretoria has maintained stable property values. Suburbs such as Menlyn, Brooklyn, and Hatfield are popular with students and young professionals, making them high-demand rental areas," Geffen said.
Student housing and multi-unit rentals are ideal in Pretoria, especially in neighbourhoods close to universities.
Durban’s North Coast: coastal living and emerging tourism hub
Durban’s warm climate and scenic coastline make it an attractive location for property investors, especially with semigration having driven up demand, according to Geffen.
The city of Durban has been experiencing rising interest from both local and foreign investors.
Areas like Umhlanga and Ballito have seen substantial growth due to the rising demand for coastal living and holiday rentals. There is also a construction boom in these area with new developments catering to middle- and upper-income buyers.
"Holiday rentals and beachfront properties aimed at the tourist market are particularly attractive options for investment buyers as they generally offer high rental yields," Geffen said.
"Additionally, family homes in gated estates are popular in suburbs such as La Lucia, which provides a mix of security and coastal appeal, making it a preferred choice for families and retirees."
The Garden Route: scenic retreats with growing popularity
The Garden Route, with its stunning scenery and desirable quality of life, has emerged as a popular hotspot for retirees, remote workers, and those seeking a more relaxed lifestyle.
Towns like George, Knysna and Plettenberg Bay are seeing an influx of buyers looking for peaceful, high-quality living environments, according to Geffen.
Geffen said: "The market is currently largely driven by buyers relocating from cities in search of lifestyle properties and this has pushed property values up, particularly for homes with coastal views or in gated estates."
"Estate homes and retirement properties are in especially high demand along this coastal strip, especially popular in George and Knysna. Holiday homes are another promising investment, as the area’s tourism industry is growing and provides a consistent demand for short-term rentals."
Eastern Cape: affordable market with untapped potential
The Eastern Cape, particularly the cities of Gqeberha (Port Elizabeth) and East London, offers affordability as well as growth potential. These are are popular among first-time buyers and investors looking for value-for-money properties.
Due to the lower price points and ongoing infrastructural improvements, the Eastern Cape has been seeing steady growth in recent years plus there is an increasing demand for homes among younger buyers who prefer affordable living with proximity to the coast.
"Affordable residential properties across the board in Port Elizabeth and East London are popular and multi-family homes and townhouses appeal to families and young professionals seeking cost-effective housing options," Geffen said.
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