The micro-living trend has arrived in South Africa and is making it possible for easy access to property investing in a niche investment sector that is set to explode in SA as an alternative residential asset with higher yields than other property classes.
This is according to Alexa Horne, MD of Dogon Group Properties (DG), who says that DG have been seeing high demand for micro-living apartments.
Horne unpacks the top five reasons why people are investing in micro-living apartments:
1. Demand is high
“The world is abuzz with change, and new lifestyles are being embraced. Millennials are looking for location over square footage. They are getting married later, and putting careers first. They want to be close to the city centre, close enough to walk, bike, or rely on public transportation – not wasting time on commuting.”
“Enter demand for the growing lifestyle trend of micro-living, an affordable self-contained, open-plan living space designed to accommodate a bedroom, sitting area and kitchenette in 14–32 square metres situated in the city centre, close to all amenities.”
2. Prime locations
According to Horne, micro-flats are usually located near key employment nodes in CBD’s of major cities and universities – often in areas where development space is highly limited. This adds to the appeal of these apartment, especially amongst young working professionals and students requiring convenient living.
“Student accommodation investment is also considered a very lucrative market (outside of a global pandemic scenario), so micro-living apartments near to universities will enjoy demand from student tenants, bringing in ongoing rental returns.”
3. Varied target audience
“In addition to millennials and students – there is a fairly wide range of target demographics that are drawn to micro-living apartments,” says Horne.
“Although the youth is currently the largest target market, micro-apartments are becoming relevant in several phases of life – making property investment in micro-living an opportunity for all generations.”
“Micro apartments also appeal to new working professionals branching out from their childhood home, and business travellers of all ages who purchase these apartments to stay in whilst travelling for work. There is also a market for the newly retired who are downscaling and wish to spend time travelling and not being hindered by the maintenance and upkeep of a larger home.”
4. Initial investment is low
Horne advises that micro-living apartments are attractively priced for their location, allowing young people to get their foot on the property ladder. “The key to real estate is to get your foot on the property ladder as early as possible and micro-living units are providing this opportunity.”
When it comes to investing in property for returns, the biggest concern is the substantial lump sum of capital needed to finance the purchase. “Given the smaller property size of micro-apartments, the entry point for investors is much lower than that of say a 1- to 2-bedroom apartment. Moreover, the lower price presents the opportunity for property investors further up the ladder to purchase more than one apartment, so the risk is spread across multiple sources,” says Horne.
5. Income is rewarding, Running cost are low
There are many benefits to micro-apartments, two that stand out is that their appealing modern amenities, combined with a central location make the return on square metre comparably high while still being in the price range of a far larger demographic, and furthermore, they generally have lower running costs and are more eco-friendly due to their size and new-build nature.”
For more visit: www.dogongroup.com.
