Post-WC drop in rentals expected

Property rental prices could most likely take a sharp plunge around the latter part of July this year after the Soccer World Cup is over.

“Residential letting is at the opposite end of that scale right now, and very high rentals are being achieved at present,” says Raal Nordin, CEO of ONLY RENTALS.

“This is perhaps due to a short period of a severe shortage of stock, as landlords are holding back with signing any leases, due to the possible financial rewards being promised in the market place by agents who perhaps do not know the exact direction of demand for World Cup rentals.”
Nordin further cautions that landlords must be extremely wary of being lured into the false promise of high rental prices during the World Cup, and further promises of great sales prices being achieved thereafter “due to an influx of foreign buyers wanting to purchase a piece of Africa”. “It is no secret that real estate agencies are battling with sales and of course creating a miniature ‘oversupply’ will boost sales due to desperate landlords that were duped into these schemes, having to sell urgently later.”

Nordin advises landlords to rather secure a good tenant now at rental prices that won’t be seen for another year, than having to drop your rental with around 20% after the World Cup. “As much as the fact exists that prices will drop after the World Cup, so will the amount of good tenants diminish during this time, as the A-Grade tenants will secure the right priced stock that becomes available early in July, from clever landlords that realise the promise of the World Cup fortunes are not coming their way.”

“In short, rather let your property now and save yourself some expensive headaches. Landlords that are already cash-strapped should not participate in this high-risk property roulette.”

What is of greater concern is that investors who wish to purchase property after the World Cup for investment purposes will think twice about buying, as rental returns will be unattractive. Is this going to cause a further downturn in property prices that will already be under pressure due to the fabricated oversupply created by real estate agents?

“Let us all hope that some of the bigger players will shortly move the direction away from this scary strategy and focus more on current supply and demand, and provide property owners with sound advice as promised by them through the code of conduct embedded in the EAAB.

For more information contact Raal Nordin on 076 066 5222