Multifamily residential association SAMRRA releases report on rapidly growing property sector
· SAMRRA's latest research report, compiled by the Centre for Affordable Housing Finance, highlights the sector's growth and potential.
· The sector is characterised by resilience, stability, and strong demand, with 23% of South African households renting.
· High occupancy rates and strong rental collections underscore the sector's viability and appeal.
· Institutional investor interest is growing due to increased transparency and robust market analyses.
The South African multifamily residential rental sector is emerging as a formidable asset class for institutional real estate investors. The South African Multifamily Residential Rental Association (SAMRRA) is at the forefront of this transformation, driving a concerted effort to unlock and leverage data to enhance understanding of investment opportunities and benefits the multifamily residential property sector delivers. Established nearly a year ago, SAMRRA has released its second insight-rich and pivotal report about the sector, compiled by the Centre for Affordable Housing Finance (CAHF).
With a growing membership base of 13 members and counting, who represent a significant portion of country’s multifamily rental market and manage over 75,000 units across 550 properties, valued at over R72 billion, SAMRRA exemplifies the scale and organisational capacity driving this sector forward. With SAMRRA leading the charge to unlock data and drive investment, as the sector shifts to becoming a more organised and better understood investment space, its efforts are fuelling even more significant growth and redefining real estate investment in South Africa.
“Our research confirms that the multifamily residential rental sector in South Africa is characterised by its resilience, stability and potential for long-term growth and sustainable value creation,” says SAMRRA CEO Myles Kritzinger.
The CAHF report reveals that with approximately 4.5 million (23%) South African households renting their homes, demand for multifamily housing is robust. Notably, some 15% of these households, or around 685,000, reside in ’apartments’, underscoring the sector's footprint and highlighting a greater opportunity for delivery of institutional grade rental portfolios. Over the past five years, the rental market has seen a 9% increase in households renting apartments, adding around 54,000 new rental units to the market. This growing (and unmet) demand is fuelled by demographic shifts and urbanisation trends, positioning multifamily rentals as a cornerstone of modern housing solutions: The profile of the tenant is increasingly those who choose to rent and actively seek a balanced lifestyle offering through amenity-rich, well-located residential rental offerings.“The growth trajectory is not only indicative of the sector's vitality but also highlights the strategic advantage for investors looking to capitalise on a burgeoning South African rental market. But investment in South Africa’s multifamily rental sector is about more than capitalising on growth, it's also about aligning capital allocation with broader sustainability goals,” notes Kritzinger.
The country’s potential-packed pipeline of multifamily projects scores high on environmental, social, and governance (ESG) metrics, providing investors with confidence that their investments contribute positively and responsibly to sustainable development, an increasingly important focus for the investment community.
Introducing SAMRRA’s latest research, Kecia Rust, Executive Director and Founder of CAHF, points out that South Africa’s multifamily residential rental sector is an increasingly robust, demonstrably resilient and qualitatively rewarding sector bringing positive, stable returns to investors and a promising pipeline of developments that surpass ESG expectations while delivering high-quality accommodation to an underserved market.
“Interestingly, the offering has shifted in recent years from simple for-rent accommodation to a full lifestyle concept, known as ‘convenience living,’ with access to a suite of additional amenities,” highlights Rust. “The market has responded such that vacancies and arrears are manageable.”
Rust elaborates that at a local level, these developments are contributing to urban regeneration and positive fiscal benefit to their local authorities, supporting good urban management and changing the face of South African cities.
Even with its promise, the multifamily residential rental market in South Africa has remained below the radar of many institutional investors, primarily stemming from limited data availability. However, SAMRRA is actively working to overcome this barrier by providing a credible industry platform which advocates for the asset class as well as and releasing detailed data and insights necessary for informed investment decisions. This initiative is boosting investor confidence and facilitating more robust market analyses.
Increasing transparency into the sector's performance metrics highlights its investment appeal. According to MSCI, the multifamily residential rental sector not only outperforms other real estate classes, such as office properties, and was the only sector to record an improved NOI yield in 2022. It also offers stable, less-risky total returns underpinned with cash-backed income yields — a strategic advantage that is further supported by favourable underlying property fundamentals. These attributes make it an attractive proposition for investors seeking long-term, stable income streams in a volatile market environment.
Globally, multifamily rentals are recognised as a mature asset class, accounting for a significant portion of investment property by value. In South Africa, the sector is poised to follow this trajectory, driven by high occupancy rates, urbanisation and changing lifestyle preferences fuelled by increasing rental demand, the multifamily sector offers a compelling case for long-term institutional investment.
A recent cross section of SAMRRA members performance data highlights recent member occupancies ranging between 96.5% to 98.5%, with strong collections in December 2024 of 98% and over.. In many instances, SAMRRA members have also achieved record leasing months, consistently concluding around 500 leases per month, reaffirming the strong demand for quality rental accommodation.
The multifamily rental sector's strategic importance is underscored by its contribution to the South African economy, supporting job creation and economic growth. As the sector evolves, it continues to attract new players and technological advancements, further enhancing its appeal to investors.
“The future of multifamily rentals in South Africa is bright, with significant opportunities for scale and institutional investment into an asset class that is clearly working. As the sector continues to mature, it is set to become a mainstay of institutional investment portfolios, offering a foundational blueprint for the future of real estate in South Africa,” says Kritzinger. “Likewise, SAMRRA is also growing, expanding its influence and its initiatives to support the sector. 2025 is set to be an exciting year for South African multifamily residential property and its proponents. The time is truly now.”
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RELEASED BY CATCHWORDS FOR:
SAMRRA – South African Multifamily Residential Rental Association
Myles Kritzinger, CEO
+27 72 440 0072
FOR MORE INFORMATION OR TO BOOK AN INTERVIEW:
Kindly contact Bronwen Noble at +27 83 453 6668 or bronwen@catchwords.co.za
