The South African Multifamily Residential Rental Association (SAMRRA) has published a new research report highlighting the sector’s rapid growth, robust demand, and strong investment potential.

Compiled by the Centre for Affordable Housing Finance (CAHF), the report underscores the multifamily residential market’s resilience and stability, with 23% of South African households renting their homes.

SAMRRA‘s growing membership includes key players managing over 75,000 units valued at R72 billion, reflecting the expanding scale of this sector.

“Our research confirms that the multifamily residential rental sector in South Africa is characterised by its resilience, stability, and potential for long-term growth,” said SAMRRA CEO Myles Kritzinger.

The CAHF report reveals that around 4.5 million (23%) South African households are renters, with 685,000 of these in apartments. Over the past five years, the rental market has grown by 9%, driven by urbanisation and demographic shifts. This has opened doors for institutional-grade rental portfolios.

“The growth trajectory is not only indicative of the sector’s vitality but also highlights the strategic advantage for investors,” said Kritzinger.

The sector’s potential is further boosted by strong environmental, social, and governance (ESG) metrics. “Interestingly, the offering has shifted from basic accommodation to ‘convenience living,’ with added amenities,” said Kecia Rust, Executive Director of CAHF.

Despite its promise, the multifamily sector has remained largely overlooked by institutional investors due to a lack of data. SAMRRA’s efforts to improve transparency and provide market insights are changing this, instilling investor confidence. According to MSCI, the multifamily sector outperformed other real estate classes in 2022 and offered stable, cash-backed returns, making it an attractive proposition in a volatile market.

Recent performance data from SAMRRA members shows high occupancy rates (96.5% to 98.5%) and strong lease collections, reinforcing the sector’s appeal. With record leasing months and over 500 leases signed each month, demand for quality rental accommodation is evident.

The multifamily residential sector is becoming a key driver of economic growth in South Africa, contributing to job creation and urban regeneration. “The future of multifamily rentals in South Africa is bright, with significant opportunities for scale and institutional investment,” said Kritzinger.

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.