South Africans are rushing to rent these properties

With unaffordable property prices and soaring living costs, many young South Africans are turning to co-living spaces and micro-apartments in major cities as a cost-effective, flexible alternative to traditional housing.

Lew Geffen Sotheby’s International Realty CEO Yael Geffen explained that there has been a rapid rise in the number of co-living spaces and micro-apartments in Johannesburg, Cape Town, and Durban.

With interest rates still close to the highest in over a decade and city centre rents climbing relentlessly, young South African professionals are forced to rethink traditional housing.

Developers are aggressively repurposing underutilised buildings into shared living hubs where tenants trade private space for affordability and community.

In Cape Town’s Woodstock and Johannesburg’s Braamfontein, companies like The Student Hub and CoLiv report waiting lists for their R6,500 to R8,000 per month rooms that include servicing and WiFi.

“This is a necessary market correction right now when consumers are drowning in debt, and the vast majority are battling to keep their heads above water,” Geffen said.

“For most young professionals, buying a home is an impossible dream at the moment with the cost of living remaining so high.”

Many are even priced out of conventional rentals. However, they still need proximity to urban work hubs. “Co-living fills that gap intelligently by optimising space and reducing costs through shared amenities.”

Sub-30 m² micro-units were once unthinkable in South Africa’s historically spacious housing market. Now, they are selling out in developments like Cape Town’s 1 on Albert in Woodstock and Sandton’s The Bryant.

Prices start at 20% below standard studio apartments, making them especially appealing to singles prioritising location over square metres.

“The success of micro-apartments proves that in the current economic climate, affordability trumps size for many buyers,” Geffen noted.

“But developers must innovate – think modular furniture, premium finishes, and tech integration – to avoid these feeling like glorified hotel rooms.”

She said that Cape Town’s developments are currently the most successful in the country because the market thrives on scarcity.

“Developers convert heritage buildings into chic spaces, achieving an average of 22% gross margins – nearly double Johannesburg’s conversions.”

Others are new developments like 1 on Albert, which offers semi-furnished micro-apartments starting at 21m² and includes 24-hour security, CCTV surveillance, and biometric access controls.

They also have features like a heated swimming pool, a communal recreation area with braai facilities, and super-fast internet connectivity. Prices at this development, less than 2 km from the CBD, begin at below R1 million.

The downsizing problem

While these properties may be popular now, it is uncertain how long this trend will continue. This poses some challenges for those looking to invest in these spaces.

For example, banks remain hesitant to finance micro-developments, seeing them as untested. Many South Africans may also be reluctant to me into compact living spaces, viewing it as a downgrade.

According to Wise Move’s 2025 Migration Report, which analysed the data from 15,000 moves across South Africa from homeowners and renters, most people are moving into similar-sized homes.

Most moves are like-for-like relocations, with the most common being a move from a 2-bedroom apartment to another, accounting for 11.19% of relocations.

Close behind is moving from a one-bedroom apartment to another one-bedroom, at 10.54%. This trend suggests that people aren’t necessarily moving for more space but for location, lifestyle, or work opportunities.

However, the report found that when people decide to make a change, they are more likely to upsize rather than downsize.

Moves from 1-bedroom to 2-bedroom apartments (6.18%) and from 2-bedroom apartments to 3-bedroom standalone homes (3.89%) are more common than moves going into smaller spaces or storage.

Moving from a 2-bedroom to a 1-bedroom flat was recorded as the most frequent type of downsizing, but it only made up 1.88% of moves.

This indicates that many South Africans are looking for more space due to growing families and the need for home offices.

So, while these smaller spaces are ideal for students and young professionals, they may struggle to attract the attention of other South Africans.

The road ahead

There are also oversupply risks associated with co-living spaces and micro-apartments. Durban’s Umhlanga corridor already shows signs of co-living saturation.

“The danger is that we mistake a stopgap solution for a cure,” Geffen warned. “Co-living can’t replace the need for broader housing reform, including faster planning approvals and incentives for mid-income developments.”

Geffen said industry leaders are split on whether this trend will last. While some predict co-living will grow to 15% of South Africa’s urban rental market by 2030, others argue it’s merely delaying a reckoning with unaffordability.

“The real test is whether these models can evolve beyond student and young professional niches to serve families and older demographics. That’s when we’ll know if this is truly transformative or just a Band-Aid.”

A key market question going forward is whether local government entities will relax density restrictions in a greater number of suburbs to enable more micro developments.

These developments are also important factors in determining whether they will be the turning point for inner-city decay and whether more relaxed density zoning in wider areas will make it more affordable for buyers to get onto the property ladder.

Geffen said one solution alone will not solve South Africa’s housing crisis, and this trend isn’t a total fix. “But for now, co-living and micro-apartments are, to some extent, rewriting the rules of urban residential design.”

They also offer a solution to younger professionals struggling to meet the immensely high cost of living in the country’s stagnant economy.