New year – and rent goes up

TRENDS: SHORTAGE OF STOCK AND HIGH CONSTRUCTION COSTS TO BLAME FOR HIKE

- Tshehla Cornelius Koteli

People often say “new year, new me”, but for tenants, it’s actually “new year, higher rent”.

Waldo Marcus, director at TPN Credit Bureau, said several factors will influence residential and commercial rents going up this year.

He predicts rent will increase by around 5% “with residential rental shortages driving escalations of 4.5% to 5.5%, commercial rentals under pressure and widening disparities between well-governed and poorly governed municipalities.

The body’s data shows the rental increase is supported by provinces like Gauteng, which is expected to see continued positive growth in key residential nodes.

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, Marcus said.

“The commercial sector, particularly office space, will continue to face downward rental growth, with escalations expected to drop to approximately 3.0%.

“However, specific asset types, particularly in storage, industrial hubs and convenience retail, are showing optimism.”