Office parks are being converted to residential estates - here's why
Category News
The concept of buy-to-let in real estate has started to see more traction as investors and property owners look to the profitable move of converting large business blocks into residential sectors.
According to FNB's Property Analysis data, almost 11% of all real estate purchases within Q1 of 2022 are buy-to-let properties. This is up 10% from 2021 despite rental vacancies being in short supply. We attempt to unveil why this is happening.
Why convert underused office blocks?
Significant corporates are seeing a trend following the pandemic where many of their employees are happy to stay working from home. As such, they are quickly converting unused office blocks and business parks into residential rental estates with the added benefit of being close to commercial centres and shopping districts.
Two big draws are making this a successful endeavour. One - renters are no longer primarily looking for affordable property so much as they are skirting the realm of the upper end of the market. Two - converted commercial property estates lie squarely within that sector, making them doubly attractive to the current rental market.
Where is the demand coming from?
Airbnb and other rental services are seeing a higher demand for rental apartments and sectional titles within luxury high-rise buildings and modern lifestyle estates. Essentially, the most significant driving factor here is South African executives, professionals, and entrepreneurs who move from province to province.
They rent the property before buying to offset their fast-paced lifestyles, or at least until they can get their bearings in new cities. This is particularly evident in the southern Cape Town suburbs, and the Northern Suburbs of Johannesburg, where a shortage of homes to rent is readily apparent.
Rental demand from multinational investors
While high-market professionals seeking rental property account for some of the demand, the most considerable portion comes from multinational firms, banks, and individuals. For the next two to three years, said individuals will seek to open new offices while expanding their ventures.
This ultimately means that high-level executives and individuals will be seeking out the same rental markets in the property as they work to establish their SA regional offices. Due to the knock-off effect of the pandemic, transnational migration has been exceedingly low during the past two years. As the world becomes more aware of what South Africa has to offer, we are only likely to see this trend increase.
Should the government work to make moving here easier by streamlining visa applications for highly skilled individuals, this demand will surely increase.
To contact one of our Real Estate Property Practitioners, follow the link: https://www.homesofdistinction.co.za/agents/
Homes of Distinction CC holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: Lv Digital
