Rentals in retirement villages and senior living estates are always in demand, and buy-to-rent investments in such properties can generate significant returns.

The April 2015 TPN Property Barometer revealed that when gross yields were estimated by title deed and room number, sectional title properties generally looked to be the most attractive, and “smaller generally appears to be better”.

Topping the list was 1-bedroom sectional title properties with a 9.53% yield, followed by 2-bedroom sectional title with 9.28% and 2+ bedroom sectional title with 8.92%.

A snapshot of this specific market in Gauteng reveals:

  • Many properties are being purchased solely to be let out
  • Quality homes offered at the right rental prices in good areas are being snapped up fairly quickly
  • There is a shortage of affordable, upmarket housing options that also have all the associated facilities this sector requires
  • There is strong demand for such properties in the rental market and as such, a shortage of these properties to rent
  • There is a sustained demand for housing in Gauteng, and as a result both the purchase and rental markets are rapidly increasing
  • Rentals remain a popular option for those who are not able to obtain bonds due to their age, for those who are feeling inflationary pressures, and those who simply prefer renting instead of owning their own home

One of the advantages of purchasing property in retirement villages for rental is that these homes offer investors the opportunity to generate a sustainable rental income as well as capital appreciation returns (i.e. the value of the home increases over time, allowing investors to make additional profits when they sell the home).

These are the annual rental returns investors can expect to achieve from investments in the mature lifestyle property market (including capital growth for years 1 to 5):

*Please note these calculations have been based on estimated unit prices for example purposes and are subject to the selling price at the time.

Unit Descriptions Year 1 Square Meters Estimate Unit Prices  Monthly Expected Minimum Rentals Monthly Costs Including - Levies, Rates & Agents Commission  Year 1 Annual Cash Yield On Investment % Year 1 Capital Growth On Investment %  Year 1 Total Growth On Investment %  5 Year Average Growth On Investment %
1A  1 Bed, 1 Bath, Single Carport  88 R995 000  R7 000  R3 264  5%  8% 12% 14%
2A 2 Bed, 1 Bath, Single Carport  102 R1 240 000  R7 500  R3 791  4%  7% 11% 13%
2B 2 Bed, 2 Bath, Single Carport 120 R1 700 000  R9 000  R4 477  3%  6% 9% 12%
2C 2 Bed, 2 Bath, Double Garage 140 R1 850 000  R11 000  R5 273  4%  7% 10% 12%
3A 3 Bed, 2 Bath, Single Garage 129 R1 880 000  R10 000  R4 845  3%  6% 10% 12%
3B 3 Bed, 2 Bath, Double Garage 157 R2 120 000  R11 500  R5 830  3%  6% 9% 12%
3C 3 Bed, 2 Bath, Double Garage 165 R2 240 000  R12 500   R6 169  3%  6% 10% 12%