Where is the sweet spot?

The TPN Vacancy Survey recorded a national vacancy rate of 9.42% for the third quarter of 2019. 

This is the highest recorded vacancy rate since the inception of the survey at the start of 2016, and has become evident after a short-lived improvement of 7.91% during the previous quarter.

The vacancy rate indicates how difficult it may be to find a suitable tenant whereas the Good Standing Ratio indicates how difficult it may be to collect rent from that tenant once placed. 

When we compare these metrics, we can see that the lowest risk properties fall between R4 500 and R12 000 per month, with different risk indicators becoming evident as prices increase or decrease from this range.

The Market Strength Index provides another dynamic in the form of supply and demand levels and therefore how “competitive” landlords need to be to place a tenant. 

Keeping this in mind, it becomes less clear where the lowest risk may be and more up to the investor to decide which variables they will feel comfortable dealing with.

Read the full TPN Vacancy Survey 2019 Q3

Post a Comment