Western Cape comes out on top in Q2 2019

The TPN Residential Rental Monitor Q2 2019 revealed that despite pressure, the Western Cape is still the best performing region. Some interesting results in the performance across the 4 provinces were noted:

“The Western Cape has been showing signs of stress, although its good standing percentage of 87.29% remains best in the country. In addition, investors can take enviable relief in only having to deal with 3.9% of non-paying tenants. Provincially the Western Cape also enjoys the highest escalation rate of 4.5%, as well as the second-lowest vacancy rate of 7.08%. Be that as it may, the Western Cape story is characterised by a dramatic three year decline, during which the market strength plummeted from 85.57 to 45.32, driving down escalations and pushing vacancies from 1.2% to current 7.08% (marginally better than the 9.9% reported in the last quarter).

Eastern Cape outperforms KZN and Gauteng regions

Although Gauteng commands the largest market share, a recent surge in new rental property stock has resulted in supply now exceeding demand with a market share index of 46.32. The consequent oversupply has driven vacancies higher to 8.3%. Nevertheless, escalations seem to have bottomed out and have subsequently risen to 3.6% in Q2 2019.

Gauteng tenants have a worse payment profile than the national average with 80.65% of tenants in good standing and the most severe challenge caused by 7.24% of non-paying tenants.

KwaZulu-Natal still attracts good tenant demand with a market strength of 58.85, meaning that relative to the national market this province enjoys higher escalations of 4.5% and lower vacancies of 7.28%. Conversely, the province continues to struggle with rent collection at just 79.4% of tenants in good standing.

Eastern Cape enjoys the best market strength index at 61.31, combining excellent rent collection with 86.32% of tenants in good standing, the lowest vacancy rate of 4.79% and comparably speaking, a reasonable rental escalation of 3.9%.”

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