Business

Township property boom in South Africa

Townships in South Africa are experiencing a boom in property value, with Soweto’s property market having doubled in price over the past decade.

This is according to research from Seeff Property Group, which found that Soweto properties are highly lucrative compared to the rest of Johannesburg.

Property educator Khali Masooane told Newzroom Afrika that the Soweto market has doubled in price in the past decade. 

A four-room house in Soweto was valued at around R150,000 ten years ago, and now, a similar house would be valued at R400,000 to R500,000.

She said this growth is not confined to Soweto but is a phenomenon that can be observed in townships across the country.

“I think it would be disingenuous to assume that you’re going to put millions of people in a specific space and think nothing of value is going to come from it, so there is a huge boom,” Masooane said. 

“Oftentimes, people had the notion that you live in the township and then move out, but now people are taking it back into themselves and want to reinvest in their space.”

She explained that townships are often considered more affordable than large metropolitan areas, and younger people are, therefore, opting to live where they grew up.

She said 40% of buyers in Soweto are under the age of 35, and most of them are first-time buyers.

Township economy boom

At the end of 2023, Stanlib outlined the growing value of property in the informal economy in a note to clients.

It found that South Africa’s township economy has weathered the economic storms battering the country better than its formal peer.

Stanlib’s head of property, Nesi Chetty, and analyst Ahmed Motara said the informal economy has grown at a staggering rate over the past decade. 

Informal economy expert GG Alcock estimates the value of the informal economy to be between R600 billion and R750 billion. 

He explained that the informal economy mirrors the structure of a formal economy, with various formal sectors mimicked in townships and informal settlements. 

Alcock said the spaza and superette sectors – which he likened to the formal, fast-moving consumer goods sector – dominate the informal economy. 

He estimated its value to be around R180 billion, with over 100,000 spaza shops nationwide and nearly 500,000 mobile traders. 

Large JSE-listed retailers, such as Shoprite, Tiger Brands and Woolworths, have begun trying to enter this market to capitalise on its rapid growth. 

As participants’ incomes in the informal economy have grown, so have their aspirations and demand for higher-end products. 

“There is a clear appetite among increasingly affluent consumers in township communities for formal retail within easy reach, creating a strategic growth opportunity for larger retail chains,” Chetty and Motara said.

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