To maintain sustainability, agencies must adopt a more intentional approach to structuring, pricing, and scaling their operations, as limited tenant affordability continues to hinder expansion.
Image: Tracey Adams
South African property professionals should look at other means of growing their businesses, such as developing and refining a managed rental service offering.
This is even as rent growth stabilises, says PayProp.
With rental growth briefly cooling in the last quarter of last year before stabilising and then recovering in the first quarter of this year(PayProp Rental Index), the market seems to have reached a balance between what rent increases landlords are setting and what tenants can afford.
The industry is said to seem happy too: PayProp’s latest State of the Rental Industry survey shows agency optimism is still riding high in 2026, with 87.7% of respondents expressing confidence in the future of the sector.
Their outlook is largely underpinned by solid market fundamentals.
PayProp’s survey report shows that demand in the rental market remains robust, with 43.1% of agents reporting lower-than-usual vacancy rates, and most properties still being let within two to four weeks.
In another plus for landlord and agent income assurance (and security of tenure in a country with high homelessness), tenant retention remains high.
"Optimism is justified-there’s no shortage of opportunity currently,” says Michelle Dickens from PayProp.
“However, growth is no longer driven just by market conditions. Strained tenant affordability is acting as a brake on growth, so agencies will need to be far more deliberate in how they structure, price and scale their businesses to stay sustainable.”
Healthy underlying conditions can also raise landlord expectations, Dickens says. “Agents will need a robust managed rental strategy to keep delivering low arrears rates, short vacancies and market-linked rental growth, no matter the market conditions.”
As in previous years, agencies are said to be aligned on how they want to grow, and there is growing awareness of smart profitability strategies.
Signing more landlords remains the favoured growth strategy for 58.9% of respondents, while 67.6% prioritise growing their managed rental portfolios to increase profitability. Yet many agencies are not wholeheartedly following through on these ambitions.
Fewer than a third (28.5%) have a dedicated budget for growing their managed rental portfolios, while more than half (50.5%) reported lowering their commission to retain landlords.
“There’s a clear gap between strategy and execution,” Dickens explains. “Agencies know that managed rentals are the key to long-term profitability, but many are still under-pricing their services or under-investing in growth. That makes it harder to build resilient, scalable businesses.”
Technology continues to play a central role in agency operations, with 92.6% of respondents viewing PropTech as a worthwhile investment and 74.1% increasing automation over the past year.
Most property professionals now see automation as both more cost-effective and more productive than increasing headcount.
At the same time, expectations are rising. Agencies are becoming more selective, with 73% indicating that they will only pay more for technology if it clearly supports business growth.
“Agencies want solutions that directly improve efficiency, reduce admin, and help them grow their portfolios without adding complexity,” says Dickens.
In other key findings, artificial intelligence is clearly emerging as the next frontier in property technology. While 39.1% of agencies already use AI in their rental business, a further 53.1% expect to invest in it in the year ahead. #
However, current use cases are largely focused on marketing and communications, such as writing property descriptions, rather than accelerating core operational processes. For now, a lack of trust is limiting how deeply agencies embed AI in their operations. Only 19% of respondents said that they would trust AI with their business data.
“AI adoption is gaining momentum, but we’re still in the early stages,” Dickens notes. “As the technology matures and trust builds, we expect to see broader use across areas like tenant vetting, inspections and financial processes.”
Earlier this month, the Landlord Association of South Africa (LASA) said recognising the realities of modern property management, the amendments explicitly support electronic leases, digital inspection records and electronic correspondence so long as the tenant consents.
This improves efficiency and accessibility, especially for landlords managing multiple units, the association said.
Digital storage also helps landlords comply with transparency and evidence requirements in case of disputes, LASA said.