More young people are moving into sectional title properties and co-living spaces, according to property industry insiders, making them an attractive opportunity for landlords.
The choice partly comes down to affordability. High interest rates and recently rising rents over the last couple of years have made it more expensive to secure housing, so homeowners and tenants have opted for smaller, cheaper properties – many of which are sectional title.
The supply of sectional title properties is also growing. In Q1 2022, 36.1% of new homes sold were sectional title, compared to 20.5% in 2010.
A main driver has been office-to-(multi-family) residence conversions, of which the greatest density can be found in cities. According to Justin Blend, director of Johannesburg-based redevelopment company Africrest Properties, when the pandemic caused a dip in demand for office space, many former office buildings were turned into residences.
How has this stacked up against an oft-reported opposing force, that of people leaving cities to work from home further out during the pandemic?
Many city-dwellers moved to bigger freehold properties in suburbs and small towns during the pandemic, and this temporarily paused the growth of sectional title living. Now that workplaces and other city amenities are open for business again, some of them are moving back to cities and trading suburban space for a shorter commute as more residential opportunities open up with office conversions.
The upshot? While urban growth slowed between 2020 and 2022, the percentage of South Africans living in cities continued to grow even during the pandemic.
Not just about price
These new sectional title developments with shared spaces have other advantages besides the price, say real estate experts.
According to Dr Andrew Golding, CEO of the Pam Golding Property group, homes with shared communal space are also a big draw for younger renters and buyers.
“Not only does this make property ownership more affordable, it also creates a sense of community which has been lost to a large degree in traditional suburban areas amidst security concerns,” he says.
And Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, adds that co-living properties in particular offer well-being and social engagement, promote inclusivity, and often come with online platforms or mobile apps to make life more convenient for residents.
With affordability likely to remain under pressure for the time being, the demand for sectional title properties may well continue to rise – and this, combined with the lower cost of entry, could also make them attractive to investors.