A city with global ambitions, Johannesburg is the cultural and economic centrepiece of South Africa and key to the nation's prosperity. Rapidly changing to meet the expectations of a new world, residential and commercial properties are being built at pace across the city. Johannesburg is also home to Maboneng, considered one of the world's most successful 'urban renewal' districts.

Alongside its modern and cosmopolitan culture, Johannesburg traces the history of South Africa across numerous museums in the city. The South African Museum of Military History, the James Hall Transport Museum and the landmark Apartheid Museum are must see venues for tourists and residents alike. There is also no shortage of bars, restaurants and shops to choose from.

Outstanding universities – both public and private – continue to attract ambitious students from around the world, leading to a student population of nearly 50,000 living in the city. The demographic of the city leaves potential strong rental yields, which are higher than most other South African cities, with gross rental yields ranging from 6.5% to 9.3%.

  • In Maboneng, Johannesburg has demonstrated one of the world's most successful 'urban renewal' development projects.
  • Johannesburg is home to a large student population of nearly 50,000 students in the city, with potential for buy-to-let investors.
  • Gross rental yields in the city are generous, outperforming most other South African cities, in particular Cape Town.

For prime real estate investment opportunities, the Northern Suburbs is the location which could offer prospective investors generous ROI. Specific locations in the Northern Suburbs include Dunkeld, Houghton Estate, Hyde Park, Illovo, Inanda, Melrose, Parkhurst, Parktown, Parkview, Sandhurst, Saxonwold, and Westcliff.

Housing Market

South Africa's rental yields are rated good to excellent, mostly providing investors with strong ROI in the buy-to-let market for smaller properties. Johannesburg is the city which overall offers among the highest gross rental yields for landlords. In areas like Sandton, yields on a studio, one-bedroom and two-bedroom apartment can reach 12,55%, 10.69% and 10.62% respectively.

Some other locations in Johannesburg offer even higher returns. Areas like Randburg and Northcliff have historically offered property investors lucrative rental yields. Average gross rental yields in Randburg can be as high as 11.51%, 13.28% and 8.01% for a studio, one-bedroom and two-bedroom apartment. Northcliff one-bedroom apartments have an average yield of nearly 18%.

In relation to buying and selling properties, Johannesburg is much in line with trends in other well-developed cities around the world. Buyers are generally aged between 18-49 and owners are mostly 36-years-old through to retirement age. The following graph shows those trends relative to age in Johannesburg, as registered in the South African Deeds office:

Most sellers of property are in the 36 to 65 or older age bracket, making up 31.2%, 29.4% and 31.3% of all house sales. Buyers are younger, with most figures attributed to the 18 – 35 and 35 – 49 years-old age bracket, making up 33.2% and 40.3% of all house purchases respectively. Property ownership favours the older demographic and 50 – 64 year-olds own nearly 40% of properties in Johannesburg

Getting a foot on the property ladder in Johannesburg can be difficult, especially for the younger demographic, due to the high asking price of properties in some locations. Apartments in more expensive areas like Rosebank – where rental yields are also strong – can cost as much as $128k for a one-bedroom apartment and $220,595 for a three-bedroom apartment.

Conclusion

With the prospect of strong rental yields across most locations, and tourist footfall throughout the year, Johannesburg has a lot to offer prospective property investors looking to gain a foothold in South Africa. Particular for smaller properties, rental yields at the higher end can easily fetch 10.49% for an apartment across most locations within the city. This is higher than Cape Town and Durban.