Rental market cooks in Kathu

The rental market in the little town of Kathu, up in the north-east corner of the Northern Cape, is about as hot as the surrounding Kalahari.

“The average monthly rental for three-bedroom houses here has almost doubled in the past year to between R8000 and R10 000 a month, and there still is plenty of demand,” says Gerrit Vos, owner of the local Aida franchise. “Four-bedroom homes fetch up to R15 000 a month and the rental for more luxurious residences such as those in the local golf estate can be as much as R20 000 a month and even more.”

The reason for the strong demand is the ongoing expansion of the iron ore and manganese mines in the area - with Kumba’s Sishen mine alone employing a large number of people – and the need to accommodate their employees, contractors and consultants.

The Sishen mine, already one of the biggest open-cast iron ore mines in the world, is expected to double production in the next five years, while the BHP Billiton, Assmang and United Manganese mines in the area are expected to raise production from the current annual production of 7,5-8Mt to 13Mt a year by 2020, mostly to satisfy demand from steelmakers in China.

“We estimate this will mean a need for at least 4000 new homes in Kathu and the surrounding small towns of Kuruman, Postmasburg and Olifantshoek over the next five years,” says Vos, “and although most of these will probably be built and owned by the mines, the continued inflow of new employees will stimulate overall economic growth here and create further demand from the owners and employees of secondary industries and new service, supply and retail businesses.”

As it is, he says, demand for both rental properties and homes to buy is running well ahead of supply, and this situation is not likely to change soon, due to a lack of infrastructure to supply services such as electricity, water and waste connections to new residential areas.

“The shortage of new development is evidenced by the way home prices here have risen in the past five years, despite the recession, from around R250 000 to about R850 000 now for a basic three-bedroom house, and right up to about R2,5m for a more modern, upmarket home with four or five bedrooms.

“And because prices have historically been a little lower in surrounding towns, the shortage of properties for sale there is currently even more pronounced, leaving most people relocating to this area - and many local residents - with little choice now but to rent.”

Article by: www.aida.co.za