Good returns reported on student accommodation in Magalies

MAGALIES, Gauteng (March 25) – Separating the bustle of the Gauteng city life from the serenity of the African bushveld lies the Magaliesberg, a majestic mountain range rich in early creation, wildlife and scenic exhibition. So says the introduction to the Magalies Meander website, where tourists can read all about the attractions of the area.

However, there’s another side to Magalies, one where ordinary people build and live their lives and form part of the community. And in the Magalies area, located in the north eastern part of Pretoria, the presence of students at nearby Onderstepoort Veterinary training facility and the upbeat commercial development taking place along Zambezi drive are playing a pivotal role in the region’s economy.

“In the absolute buyers’ market prevailing at present in Magalies, one really bright spot is the potential student commune market, which suggests that investors may realise good returns as a result of the demand for student accommodation,” says Chris du Toit, franchisee of Realty1 International Property Group in Magalies.

“The proximity of the area to Onderstepoort means students needing somewhere else to stay besides the traditional student residences. With property affordability becoming a problem for many, even in the rental market, investors are starting to look at other options,” he says. “One of the obvious opportunities is to buy up old, established properties that are now available at realistic prices, and turn them into communes.”

Du Toit says that commune rooms go for around R1500 per month upwards, so a property with four bedrooms could bring in R6000 per month – a reasonable rental for the area. Townhouses are also popular – a parent might buy a two or three bedroom unit and siblings or friends move in together.

He is also seeing an increasing trend for families to move in together. “Potential buyers these days are looking more at properties with granny flats and garden cottages. So many people are scaling down – you can see caravans and 4x4’s advertised for sale. Affordability is hitting homeowners hard, and bringing the extended family in to share costs is a good way to economise.”

Du Toit says he still has buyers looking for properties and sellers are finally starting to ask for more realistic prices now. A cross section of property types on his books is moving. Although there’s not much available in the affordable market, there is plenty of stock in the R500k and upwards price range. Cash buyers usually dominate the luxury market and even in this segment there are many properties for sale.

There is also a growing need for affordable housing. Properties below R500 000 are in great demand, but du Toit believes the developers are not really interested in this market as the potential profits are too low.

“If you can give me 100 units in that price range I will sell them all very quickly,” says du Toit. “There are some developments that have been approved in the higher price range but they don’t seem to be coming to light. One development has been under construction for three years now.”

However, du Toit is still positive. “It’s a difficult time of the year, and a difficult year,” he says. “But there’s definitely still business. I expect things to improve later in the year, although if there’s another interest rate hike it will cause havoc.”

Article from: