RTO driving higher demand for small apartments

Our agents in the commercial centres of Johannesburg, Pretoria, Cape Town and other metros are reporting a spike in demand for studio and especially one-bedroom sectional title apartments to rent as an increasing number of employees return to the office after working at home since the onset of the COVID-19 pandemic.

And this is creating a gap for investors, who have been focused for some time on two-bedroom apartments and townhouses, as they believed smaller units would not deliver good returns. 

Many large companies are now insisting that employees be in the office at least three or four days a week, and that is prompting many young professionals to move closer to work to avoid having to commute. Of course, rentals in the commercial centres tend to be higher than in the suburbs, but they are able to get around this because they no longer need a home office and can go smaller.

Studio and one-bedroom units in secure, high-end sectional title developments are also in demand among executives who relocated their families away from the cities during the pandemic, and have no intention of moving back, but need a base close to their offices from Monday to Friday. In Johannesburg, many of these tenants are supercommuters from the Western Cape and KZN.

As a result, rental listings for one-bedroom units in upmarket Johannesburg suburbs such as Dunkeld, Craighall, Hyde Park and Rosebank / Killarney are now attracting up to 30 enquiries from eager tenants, and the situation is similar in Pretoria suburbs like Menlyn and Lynnwood. Demand for such units is also rising in central Centurion, Midrand, Waterfall and in Bedfordview and Kempton Park on the East Rand.

Meanwhile, the first-time buyer's market is starting to revive following the elections in May and in anticipation of lower interest rates later this year, and this is compounding a shortage of good quality one-bedroom units. Demand is highest in the R950 000 to R1,2m price range - which is where astute buy-to-let investors should also now be looking for good deals.