New property investment trends are emerging in South Africa as investors tap into the growing demand for coastal homes and look beyond traditional rental models to build wealth.

Recent data indicates that one in eight mortgage applications nationally over the past year were for buy-to-let properties, highlighting a strong appetite for property investment across the country.

The Western Cape has emerged as a leading hotspot for property investors, with 31% of new home-loan applications in the province linked to buy-to-let ventures – more than double the national average of 12%. Over the past decade, the province has consistently positioned itself as an investment destination, benefiting from consistent demand driven by tourism and a growing expat community.

Interest in bed and breakfasts (B&Bs) and stand-alone homes within estates has surged, particularly over the past five years. The province also ranks second – after Gauteng – in terms of building loans issued, with a significant portion taken up by buy-to-let investors. Large estates, B&Bs, and multiple dwellings on a single stand are becoming increasingly popular investment options.

Gauteng Rental Growth

Gauteng, South Africa’s economic hub, continues to show strong buy-to-let activity, nearly double the national average. Tshwane is leading in this regard, and the province’s rental market is driven largely by investors seeking additional income streams. In Johannesburg, property investment tends to focus more on rental income, whereas in the Western Cape, short-term rentals are particularly popular.

The Eastern Cape has also become a key player in the buy-to-let market, attracting more property investment than the national average. In contrast, KwaZulu-Natal (KZN) has seen lower buy-to-let activity in the past year, with only 6% of home-loan applications in the province linked to property investment. Factors such as environmental setbacks, including floods, and the 2021 riots have impacted investor confidence in the region.

Looking ahead, innovative financing options such as rent-to-buy are gaining traction among investors and home seekers alike. MJ Dafel, CEO of Property.CoZa South Africa, comments on this emerging trend: “Rent-to-buy agreements offer a unique opportunity for aspiring homeowners who may struggle with upfront financing. This model not only makes homeownership more accessible but also provides investors with a structured way to secure long-term tenants and stable returns. As the market evolves, we anticipate increased interest in this alternative approach to property acquisition.”

Overall, this year’s data highlights the evolving nature of South Africa’s investment property market, with notable shifts in provincial preferences and emerging financial models that could reshape the landscape for investors.