Investing in property is one of the most reliable ways to build long-term wealth, but not all properties offer the same return on investment. Identifying the right property requires careful evaluation of several key factors that determine its profitability and growth potential.
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Location remains the most critical factor in property investment. Antonie Goosen, principal and founder of Meridian Realty, explains: "A well-located property will always have demand, whether for buyers or tenants. Areas with strong economic activity, good schools, and accessible transport links tend to perform better in terms of value appreciation and rental income."
Even though townships have historically been perceived as areas with limited resources and opportunities, with the right approach, they can be transformed into vibrant, functional, and attractive communities. Nqobi Malinga, uMaStandi Portfolio Manager for Johannesburg, says that making a township property attractive doesn’t just uplift the area - it can also translate into greater profitability for property entrepreneurs.
"As someone who has spent years working in urban development, I have seen firsthand the potential that lies within our townships. By developing properties with care and with their tenants’ needs top of mind, property entrepreneurs developing in the townships can reap the benefit of offering quality real estate," says Malinga.
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"For instance, while rentals for affordable housing are often around R2 500, high quality township properties can earn between R3 500 to R4 500 for an apartment. In fact, within the affordable accommodation sector, uMaStandi has observed that tenants are prepared to pay an additional R1 000 to R2 000 for properties offering sought-after features," he adds.
It is essential for property entrepreneurs to remember that tenants are people first. There is psychology behind creating a property that is more than just four walls and a ceiling - it should be a livable, attractive space. Tenants, like everyone else, want a haven where they feel safe and happy.
"Having a home that is of higher quality can fill tenants with a sense of achievement and pride. Offering tenants a place that goes beyond meeting their basic needs for survival and security, but their emotional needs as well, makes it more likely that they will stay in their residence for a longer term, thus ensuring greater retention and less tenant churn," notes Malinga.
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Several key factors can make properties command higher rentals.
Size matters. Unit sizes of around 25 square meters are ideal for bachelor or one-bedroom units, allowing space for a queen-sized bed, entertainment area, and desk. Proper use of space is essential.
Natural lighting. Large windows, especially in bedrooms and lounge areas, bring in light and ventilation, elevating the living space. High-quality properties must also be kept clean and well maintained.
Independent facilities. Having a private kitchenette and bathroom, rather than shared spaces, is a significant drawcard that tenants are willing to pay more for.
Tenant convenience. Reliable water and electricity, fast Wi-Fi, safe and adequate parking, and overall security are essential for tenant satisfaction. Well-lit streets and secure fencing can greatly enhance appeal.
Energy efficiency. Malinga encourages entrepreneurs to implement energy-saving measures, such as energy-efficient lightbulbs, prepaid meters, and timers for shared geysers to manage electricity demand.
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While achieving higher rentals in the affordable housing sector requires effort - from planning and design to construction and finishes - it is well worth it. Not only can it increase profitability, but it also uplifts the area, contributes to urban regeneration, and provides residents with a higher standard of living.
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