Holiday rentals boom, opportunity in previously underserviced areas

Holiday rentals boom, opportunity in previously underserviced areas

MAIN IMAGE: Ciska de Vries, rental agent, Seeff Hermanus; Jan Davel, PayProp CEO;  Precious Thoka, Principal at Thoka Properties, Gauteng

Danie Keet

While the affluent holiday market in upmarket areas are set for a boomtime this summer, exciting opportunities in underserviced areas are also lucrative.

The holiday rental market, especially along the coast, is expected to boom as the festive season approaches, but agents note that bookings are often last minute due to the uncertainty around the pandemic lockdowns.

Although holiday makers tend to leave bookings a bit late, there is no shortage of eagerness to get away for a holiday. Many are also booking in any event as they will want to get out of the house and to a nice coastal holiday house or apartment before the next wave hits.

While some international travel will still be affected due to international travel restrictions, Seeff’s agents expect South Africans to flock to holiday destinations this summer.

Ross Levin, licensee for Seeff Atlantic Seaboard and City Bowl says Cape Town will be a hot spot. The attraction is endless and there is no doubt that those who can travel, will head to the Cape and will find good value too.

The beaches, lifestyle and tourist attractions remain a key differentiator for the Cape coastal areas. Marina Enslin, an agent with Seeff Paternoster for example, says that weekends are basically fully booked in the village as people look to escape the city.

Ciska de Vries, short-let rental agent for Seeff Hermanus says they are already about 85% booked out for December and January. This year has been a surprise with bookings in Hermanus tripling, some homes have even quadrupled in booking conversions, she adds.

She says further that guests have more downtime with extended school holidays and lockdown periods and guests have been eager for mini breakaways. Almost 90% of bookings are local South Africans with only about 10% international, mostly from Europe and a few from the USA.

Prices have remained fairly flat with a slight decrease in some rates. Rates are down by about 20% from what they should have been if there was no pandemic, hence the rate for a three-bedroomed house is around R2 500/night and for a luxury 6-8 bedroomed villa about R12 500/night max.

Weekend bookings also remain popular. Month-to-month rentals are also booming in Hermanus due to the pandemic as people look to escape the confines of their city homes. Rentals range from R15 000/month for a smaller home to as much as R35 000 for bigger homes. Bookings are coming from Joburg, Pretoria and even KZN, often at short notice as people want to quickly get away before the restrictions.

Joleen Giraudeau, manager for Seeff South Coast says they have had loads of enquiries, but booking confirmations are slow. They expect it will pick up drastically closer to December as people will want to get away, especially if there is a fourth wave then.

The South Coast expects bookings to be better this December compared to last year because people want to get out of their houses and cities and go on holiday. The pandemic has had a major dampening effect on people, and they are looking to get out, not just South Africans but foreigners too, although we expect foreign bookings to be lower due to international border closures.

Prices on the South and Mid-South Coast have remained flat. Current rates are around R1300 to R2850/night which is an almost “give-away” price.

Rental rates have remained largely flat and discounted rates apply for longer stays. Homes which rented at R10,000/night previously will now rent at R8,000/night and homes which rented at R5,000/night can be expected to rent at R4,000/night during peak periods. Outside of peak periods demand drops off once rates exceed R2,500/night.

On the other side of the property spectrum residential rentals provide an exciting opportunity for real estate agencies in previously underserviced areas, according to PayProp, South Africa’s leading rental payment platform.

PayProp CEO Jan Davel says residential rental business opportunities are plentiful in the fast-growing formal private rented sector in emerging market areas, such as Soweto in Gauteng and areas of the Cape Flats in the Western Cape.

“People will always need a place to stay, and with growth in both residential rental demand and supply according to the latest PayProp Rental Index (Q2, 2021), landlords and tenants will need competent agencies in these areas with the necessary tools, knowledge and credentials to manage their investments and tenancies.”


A hurdle for many property entrepreneurs focused on rentals is the significant ongoing payment administration and strict industry regulations. Davel says that it’s important to identify the right tools that will automate all the critical payment administration required each month.

“Consider all the invoices, statements, reminders, receipts, reconciliations, and payments at month-end. Even if you manage 10 properties it can add up to a day or two each month.”

Precious Thoka, Principal at Thoka Properties in Gauteng, says he initially refused to take on rental business due to the level of administration required. “The input and output didn’t seem to make business sense. So, when we started Thoka Properties, rentals were not part of the plan. However, after a few months we realised that we were losing out on a lot of potential business. I thus decided to reconsider.” Thoka Properties is now a PayProp-powered agency, helping Precious Thoka to build a thriving rental business without the heavy administrative workload that previously put him off.

Davel says finding the right technology to automate much of the administration makes rentals a far more viable option for many property professionals. “The right partner can help you build a sustainable business by automating your admin in a compliant, transparent way.”

To make the job easier for new market entrants in historically disadvantaged areas, the law is changing.

For years, the Estate Agency Affairs Act (112 of 1976) required property practitioners to manage a trust account environment that lets them separate their client and business funds. However, when the new Property Practitioners Act (22 of 2019) comes into effect after the incoming Property Practitioners Regulations are finalised, this will change.

“Under the new Act, an agency can apply for exemption from operating its own trust account and from having it audited – as long as they follow the prescribed procedure and use an ‘approved payment processing agent’ such as PayProp,” says Davel.

Underserviced areas

PayProp has noticed a steady increase in the opening of smaller agencies servicing historically disadvantaged areas and run by local entrepreneurs – and they say that powerful, affordable property technology will help this exciting trend to continue from strength to strength.

“As the Property Practitioners Act states, the property market is a national asset that restores the dignity of all South Africans through the basic constitutional right to ownership of immovable property,” says Brenda Matyolo, member of the board of PayProp in South Africa.

“We are proud to help the industry redress historic imbalances by opening up business opportunities in the private rented sector. PayProp’s offering represents the state of the art in rental payment automation and out-of-the-box payment compliance, all for a minimal monthly percentage fee affordable to all sectors of society.”

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