Sandton is a suburb to the north of Johannesburg. It has become the beating heart of corporate South Africa.
In previous years, residential developments in the area have seen substantial capital appreciation as well as rental returns.This may soon change.
Driving through the Sandton CBD or paging through the property section of a newspaper one is exposed to a number of new residential developments coming up in Sandton. I am aware of The Leonardo, Capital on the Park, Sandton Skye (3 towers) and Metropolis. However, it is my estimation that the market is already saturated. If one browses through listings or calls an agent in the area one will find that numerous apartments have been listed for rental purposes, often for months.
What this implies is that supply may soon far outstrip demand (particularly, as many people have purchased these apartments for investment purposes) this will be accompanied by a fall in rentals, starting with the older apartment blocks.
Also SA is now in an interest hiking cycle which may spell even more problems for investors who are heavily leveraged.
In the indeterminable long run demand would pick up, and Africa's richest square mile may prove to be golden. However, until then investors may be in for some disappointing returns.
Investors should be wary, they should examine the market on its fundamentals and avoid the hype
In previous years, residential developments in the area have seen substantial capital appreciation as well as rental returns.This may soon change.
Driving through the Sandton CBD or paging through the property section of a newspaper one is exposed to a number of new residential developments coming up in Sandton. I am aware of The Leonardo, Capital on the Park, Sandton Skye (3 towers) and Metropolis. However, it is my estimation that the market is already saturated. If one browses through listings or calls an agent in the area one will find that numerous apartments have been listed for rental purposes, often for months.
What this implies is that supply may soon far outstrip demand (particularly, as many people have purchased these apartments for investment purposes) this will be accompanied by a fall in rentals, starting with the older apartment blocks.
Also SA is now in an interest hiking cycle which may spell even more problems for investors who are heavily leveraged.
In the indeterminable long run demand would pick up, and Africa's richest square mile may prove to be golden. However, until then investors may be in for some disappointing returns.
Investors should be wary, they should examine the market on its fundamentals and avoid the hype
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