A combination of factors in Mpumalanga such as new mines and power stations, annual shutdowns and an influx of contractual workers are causing an unprecedented demand for accommodation and especially rental accommodation in towns like Secunda, Witbank andMiddelburg.
Property in these towns generally gets snapped up as soon as it becomes available and good return on investment is predicted for new developments, resulting in an ideal opportunity for investment buyers to obtain property in these towns.
Every year around August and September, Petrochemical giant Sasol in Secunda has an annual shut down where literally thousands of highly skilled engineers, technicians, artisans and administrative workers stream to this energy and chemical company for welding, mechanical, electrical and instrumentation activities. This sudden influx of people, requiring accommodation in all the different price brackets, inevitably places an enormous amount of pressure on the market for rental accommodation.
This is according to Billy Fick, Seeff’s MD in Secunda, who says although more people come to Secunda and surrounds during the shutdown months, Seeff Secunda experiences a rental shortage right throughout the year. “At any given time people are employed to work at Sasol on a contractual basis, resulting in the demand for rental accommodation far outweighing the supply.”
In the past year, two new developments saw the light in towns neighbouring Secunda. The first is Hibiscus Place located in Trichardt only 7 kilometres from the business centre of Secunda and will be ready for occupation by the end of February 2015. The development has 106 units, ranging in size from 143 square metres to 221 square metres and each unit has three bedrooms, two bathrooms and a double garage. Every unit also has a gas stove, a gas geyser and a gas fireplace.
Prices of the units range between R1.39 million and R2.1 million. Finishes include granite tops in the kitchen and bathroom and tile and/or laminated floors. The estate has good security with electric fencing and security guards at the gate, a park for children to play in and future plans include a school, nursery school, garage, shopping centre, hotel and office block. Three show houses have been built and furnished for show days.
Fick says units in this development are popular and that 15 units have already been sold off plan. “Modern security complexes are scarce in this area. We anticipate buyers to get about 15 percent growth on their investments within the first year”.
The second development in the area is The Gayles in Evander that was launched in 2013. 80 percent of the first phase has already been sold and units should be completed by the end of 2014. The second phase is planned for mid 2014. Phase one has 124 units and is priced between R612 150 and R789 500 for two bedroom and three bedroom units. Units range in size from 76 square metres to 94 square metres. While Hibiscus Place is aimed more at the top end market, The Gayles offers secure living for the lower and middle income brackets.
The property market in Secunda consists primarily of full title units with the largest property demographic being three and four bedroom full title properties with stand sizes ranging mostly from 500 square metres to 1 000 square metres. Three bedroom homes are available from around R1.1 million.
At the moment there is also a guesthouse with 17 bedrooms on sale for R5.5 million and a complex with seven units on sale for R6 million. “These are both great options for buyers seeking to buy for investment opportunities. Trichardt and Evander generally have more affordable properties. Apartments in these areas with one and two bedrooms are available from as little as R600 000 to R850 000, while bigger and more expensive properties are also available.
Fick says rental property prices in Secunda have shown a steady increase over the last year. The average rental income for a three bedroom home is around R9 000, while a four bedroom home can easily be rented out for R11 000 per month. ‘’We have also seen an increase in the number of young buyers between 18 and 35 years entering the market. While Secunda and surrounds offer many affordable starter homes for first-time home buyers, it equally offers lucrative opportunities for investors.’’
In Witbank, Seeff Witbank MD, Daphne Pick, says rental accommodation in the area is equally in demand. “Witbank is rapidly expanding due to a new power station, Kusile, under construction. Eskom is recruiting a lot of specialist contractors from overseas to complete the project. The area is also home to an ever increasing mining industry which employs engineers and the like. There is a constant demand for sectional title accommodation in especially the affordable housing sector.
“Eskom has made it possible for their employees to own property by providing financing for new, affordable developments, but there is also a noticeable rise in the demand for more luxurious property from more affluent buyers like mine owners, managers, engineers and overseas contractors.”
Pick says there is a good return on property investments in Witbank, with rental prices being at a premium and a shortage of rental properties. “This proves that the geographics and demographics of Witbank are quickly changing.”
Seeff Middelburg MD, Willemien Badenhorst, says Middelburg equally is showing a big demand for rental accommodation, in spite of the fact that a stainless steel factory in this town has recently retrenched more than 200 people. “At the same time there are many new mines currently in the process of being opened in Middelburg and a lot of people from mines inRustenburg are being transferred to Middelburg”.
Badenhorst says the biggest demand for rental property in Middelburg at the moment is for houses in the price range between R6 500 and R8 000 per month, but this is tricky because property in these price brackets get swept up the moment it becomes available. “There is more of a demand for houses than townhouses and flats because most complexes in town don’t allow pets anymore.”
The purchase price for a one bedroom flat in Middelburg is around R470 000 to R500 000 and the average rental income from that is between R4 000 and R5 000 per month. A two bedroom apartment costs around R660 000 to R800 000 and the rental income is between R5 500 and R6 500. A house with three bedrooms costs around R950 000 and R1.1 million and has a monthly rental yield of R8 500 to R12 000, says Badenhorst.