Multifamily Residential Sector Gaining Momentum as a Key Investment Asset in South Africa

• SAMRRA's latest report highlights the growth of South Africa's multifamily sector, driven by strong demand, high occupancy rates, and resilience.
• The sector is attracting institutional investors, fuelled by data transparency, robust market analysis, and alignment with sustainability goals (ESG).
• With strong rental performance and growing tenant demand, multifamily properties are becoming a significant asset class, poised for long-term institutional investment.

The South African multifamily residential rental market is rapidly emerging as a leading asset class for institutional investors, with growing demand, high occupancy rates, and strong rental collections underscoring its appeal. The South African Multifamily Residential Rental Association (SAMRRA) is at the forefront of driving this transformation, unlocking data and promoting transparency to boost investment in this burgeoning sector.

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SAMRRA’s latest report, compiled by the Centre for Affordable Housing Finance (CAHF), highlights the resilience, stability, and growth potential of the multifamily sector. With approximately 4.5 million South African households renting (about 23% of the total), demand for rental properties remains strong. Notably, around 685,000 households live in apartments, reflecting the growing demand for institutional-grade rental portfolios. The market has seen a 9% increase in households renting apartments over the last five years, driven by urbanization and changing demographics, offering significant opportunities for investors.

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Investment Growth and Sustainability

The sector’s growth is not just a reflection of increased demand but also an alignment with broader sustainability goals. SAMRRA's members are focusing on environmental, social, and governance (ESG) metrics, which are becoming increasingly important for institutional investors. South Africa’s multifamily projects score high on ESG parameters, reassuring investors that their capital is contributing positively to sustainable development.

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Kecia Rust, Executive Director of CAHF, emphasized that the sector is shifting from simple rental accommodation to "convenience living" — a lifestyle offering with added amenities like gyms, communal spaces, and even concierge services. This transition has made vacancies and arrears more manageable, while also contributing to urban regeneration and positively impacting local authorities.

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Challenges and Data Transparency

Despite its potential, South Africa’s multifamily sector has largely remained under the radar of many institutional investors, mainly due to limited data availability. SAMRRA is addressing this issue by providing a platform for credible industry insights and performance metrics. By unlocking data and making it publicly available, SAMRRA is enhancing transparency and helping investors make informed decisions about the multifamily rental market.

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The growing availability of data has allowed for more robust market analyses. According to MSCI, the multifamily sector has outperformed other real estate asset classes, such as office properties, and was the only sector to see an improved net operating income (NOI) yield in 2022. This sector offers stable, less-risky total returns, making it a desirable option for long-term, income-seeking investors.

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Strong Market Fundamentals and High Occupancy

SAMRRA members report impressive occupancy rates between 96.5% and 98.5%, with December 2024 collections exceeding 98%. Many SAMRRA members have also experienced record leasing months, signing around 500 leases per month. This solid performance demonstrates the continued strength of demand for quality rental accommodation, further supporting the sector's investment viability.

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In South Africa’s largest housing market, Gauteng, the multifamily rental sector is also showing positive signs. The sector’s resilience, coupled with favourable property fundamentals, positions it as an attractive investment opportunity for both local and international investors.

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A Bright Future for Multifamily Rentals in South Africa

The future of South Africa's multifamily rental market looks promising, with significant growth potential in both residential and commercial segments. Urbanization, changing lifestyles, and high demand for rental properties are key factors driving the sector’s evolution. As institutional interest in this asset class continues to grow, multifamily properties are poised to become a mainstay in investment portfolios.

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SAMRRA, with its expanding membership base and influential initiatives, is set to play a pivotal role in the continued growth and maturity of the sector. With over R72 billion worth of properties across 75,000 units managed by its members, the association is driving the transformation of the multifamily residential rental market into a more organised, data-driven, and attractive investment opportunity.

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CEO Myles Kritzinger believes that the sector’s future is bright, and with sustained growth and innovation, it is positioned to become a cornerstone of real estate investment in South Africa. "The time is now," says Kritzinger, with 2025 expected to be an exciting year for the multifamily residential property sector. As the sector matures and institutional investment continues to flow in, it offers a solid foundation for the future of South African real estate.

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