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Wednesday Sep 18, 2013

Joburg's residential transformation

Joburg's reputation as a violent city is changing, and it's fast becoming the place to live.

This is confirmed by the fact that there is now less than 1 percent chance of finding a decent flat to rent in the inner city, as residential vacancies and arrears hit a historic low - and pave the way for a new surge of investor interest.

And crime has decreased, especially in the residential improvement districts around the inner city.

Andrew Schaefer, managing director of national property investment and management group Trafalgar, says there has been a steady improvement in vacancies over the past 18 months.

These reduced vacancies follow an oversupply of rental units two years ago when about 2 500 units were released in buildings that were converted from commercial to residential over a short space of time.

'The vacancy impact was most marked in bachelor and one-bedroom units, and this oversupply has taken about a year to be absorbed,' he said.

In the inner city, two-bedroom units are in highest demand, commanding rentals of between R3 000 and R4 500 a month, depending on size and location.

Investors can expect returns of between 11 and 15 percent.

Areas such as Yeoville, Berea and parts of Hillbrow tend to command the highest rentals.

The low vacancies and low arrears, generally below 5 percent, has helped in stabilised buildings, where they are tightly managed to sustain long-term viability. The Trust for Urban Housing Finance (TUHF) is assisting many people in buying and refurbishing buildings and, while medium and large portfolio owners are the most prominent buyers.

There is also a growing number of TUHF-funded entrepreneurs who are steadily expanding their portfolios by purchasing small to medium buildings as opportunities arise.

There were also professionals working in the inner city purchasing sectional title units close to work, as well as parents investing in a student accommodation unit to match a university study programme for their children, said Schaefer.

This positive trend is reinforced by a recent study that shows that Joburg is increasingly being perceived in the global community as a destination of choice for investment, commerce and tourism.

The 2013 Anholt-GfK Roper City Brand Index is now ranking Joburg in 44th position, up one from a 45th ranking.

However, the city has shown the second-biggest improvement in perceptions among the 5 000 people in 10 developed and developing countries who participated in the survey.

City manager Trevor Fowler says the survey shows definitively that international perceptions about the city - and thus, also about the country - are on an upward trajectory.

'The city's reputation as a dynamic host city of global conferences, exhibitions and events is strengthening these positive impressions,' he said.

'Among these is next month's One Young World Summit, a global forum of youth leaders, which will host more than a 1 000 delegates.

'The second large international event is the C40 Summit on climate change in February 2014, where global leaders, activists and innovators come together to discuss issues of vital importance to the future of the world.'

The survey finds that Joburg's strengths are its physical attributes, business and educational opportunities, accommodation, and amenities, as well as that it is becoming a safer place to visit.

Joburg embraces its African identity and represents the spontaneity and vibrancy of the diverse cities across this continent.

It also remains as the most commercially advanced in Africa and the engine room of the South African and regional economy - with a unique, African character.

Investors use the city as a springboard to access other parts of the country and continent.

Over 70 percent of the local and global corporation headquarters are housed in Joburg.

This has been largely influenced, according to the report, by the city's world-class infrastructure in the fields of telecommunications, transportation, water and power, health care, educational and sports facilities.

More importantly, it is home to the Johannesburg Stock Exchange, voted as the best stock exchange on the continent for four consecutive years.

The Star

 
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