A persistent residential rental shortage drives predicted price growth, while commercial property, particularly office space, faces headwinds but shows vacancy improvements due to limited new supply.
Image: Tracey Adams
South Africa is a rental nation. Some 4.5 million households-nearly one in four-rent their homes, and the apartment rental segment added roughly 54,000 units in five years, writes Old Mutual Alternative Investments in a LinkedIn post.
The private alternative investment manager says that, yet, institutional-grade rental stock remains a fraction of the market.
“That gap creates a compelling investment opportunity in professionally managed, well-located rental platforms that reflect how South Africans increasingly live: urban, mobile and affordability-conscious. In multifamily residential, delivering quality, secure and accessible homes is not separate from the investment case,” Old Mutual Alternative Investments says.
Earlier this month, Aidan-John (AJ) Rothman, CEO of Tuhf Capital, said the housing market has always been resilient because it is linked to real economic activity.
“What we are seeing now is not a reset of the market, but a continuation of how it has been evolving. Demand follows jobs, infrastructure, and functioning urban nodes, and capital has to follow that reality.”
Urban pressure is said to already be a reality. The World Bank estimates that 69.3% of South Africans lived in urban areas in 2024, placing sustained pressure on cities to deliver housing that is both accessible and economically viable.
“The housing backlog is not just a delivery issue. It reflects how quickly cities can respond to where people need to live and work. The real opportunity lies in enabling property entrepreneurs to build viable, scalable businesses that meet that demand.
"That is why the evolution to Tuhf Capital is important, as it gives clearer expression to the work we already do by backing entrepreneurs with the finance, expertise, and partnership they need to build sustainable property businesses,” Rothman said.
Opportunities are said to have become more geographically spread. This includes not only inner-city and suburban nodes but also growing demand across township markets where access to formal rental housing remains constrained.
In Gauteng, deal activity is said to have picked up as investor confidence improves and developers move into suburban nodes such as Randburg, Midrand, and Centurion.
Meanwhile, in the Western Cape, migration and pricing pressures continue to push development beyond traditional inner-city areas into suburban and secondary nodes. And in KwaZulu-Natal, economic hubs such as Umhlanga and the Dube Trade Port are driving demand patterns that are only gradually being matched by supply.
In February, Waldo Marcus, director at TPN Credit Bureau, said the lack of available rental supply, particularly in the residential market, will continue to push prices up. He said the core issue is the prohibitive cost and complexity of new construction.
High construction costs, coupled with the liquidation and business rescue of numerous construction companies, mean new stock will enter the market at a significantly higher price point, limiting solid returns on investment (ROI), he added.
“A persistent shortage of residential rental stock is the primary driver of predicted rental price growth, while commercial property, particularly office space, continues to face headwinds but has seen vacancy improvements due to limited new supply coming online.”
The Credit Bureau predicted that residential rental escalations would hover between 4.5% and 5.5% for 2026.
Meanwhile, Celsa Property Group says that a rental property is not simply ready for the next tenant the moment the keys are returned.
The property company says the period between tenancies is an important part of protecting the property and preparing it for a successful new lease
Before the next tenant moves in, it says the process may include:
Handling this process properly helps reduce disputes, prevents maintenance issues from being carried into the next tenancy and gives the new tenant a better experience from day one, the company adds.
“For property owners, it also means fewer unnecessary delays and greater confidence that the property is being cared for between leases…A smooth move-in starts with the work completed before the new tenant arrives.”