Advertorial
2025 marks the most positive year to date for real estate industry confidence, according to the latest PayProp State of the Rental Industry report. In the survey, which has been running since 2020, 87.1% of respondents expressed confidence in the future. Factors like falling inflation, increasing rental growth, and near-record-low tenant arrears at the close of 2024, according to the PayProp Rental Index, contribute to this optimism.
“We’ve never seen agencies this optimistic,” says André van Rooyen, Head of Sales at PayProp. “Residential rental professionals are committed to the industry and see a positive future ahead. Landlords are still cautious, but are also growing in confidence – and a growing majority are planning to hold onto their portfolios. And arrears, rent increases, and vacancy periods all appear to be returning to normal.”
Familiar challenges, with a few key shifts
While many of the sector’s core challenges remained unchanged in 2024, a few telling shifts emerged. Sourcing quality tenants (32.4%) and new rental stock (25.9%) were once again the top two concerns reported by property professionals, each showing an uptick in frequency. Inspections and maintenance took third place at 16.5%, but concerns around arrears and pre-tenancy admin declined, indicating that many agents are already streamlining their processes. Most strikingly, managing tenant arrears has dropped to fourth place, a significant shift from its second-place ranking in 2020 and third in 2021, when pandemic-related arrears were still widespread.
Technology underpins improved client service
Property professionals are also upbeat about technology’s impact on their jobs. Nearly 90% expect automation to benefit their jobs, and more now see it as a more productive and cost-effective option than hiring. A record 91.9% say it helps them deliver better client service. Agencies are also investing more in tech: 70.2% of respondents said that their workplace had increased automation compared to a year ago.
Tenant vetting is now the most digitised function at South African agencies, with 83.2% of respondents using technology to place reliable tenants. But the biggest growth areas have been inspections and maintenance, which are now automated by 57.0% and 56.7% of respondents respectively.
Growth remains the game plan for 2025
When asked how they plan to boost profitability in 2025, most property professionals pointed to one clear strategy: more managed rentals. It’s been the top choice year after year, but this time a record 68.3% called it their primary focus – up from 51.7% in 2024.
The challenge, however, is sourcing stock. Finding new rental properties is getting harder, with over a quarter of respondents naming it their biggest hurdle. Agencies will either need to develop superior competitive tactics or focus on upselling procurement-only clients. Portfolio growth and landlord retention also feature high on the list of concerns.
Despite these obstacles, agencies are betting strongly on revenue growth over cost cutting this year. Just 0.5% plan to scale down their tech spend as their top profitability-boosting strategy, 0.3% will reduce headcount, and only 1% expect to shrink their office space – highlighting a continued preference for in-person collaboration.
“Looking at agency plans in this year’s report, the majority are taking positive steps to build strong, sustainable residential rental businesses – focusing on managed rentals and investing in technology across more business functions,” concludes van Rooyen.
To download your free copy of the PayProp State of the Rental Industry report and start benchmarking your business, click here.
