Insights

Rental Flats, a Growing Business in Delft

By Anthony Muteti

Between the 3rd and 12th of June, I accompanied Professor Joel Bothello from Concordia University to Delft South assisting him with his interviews. Professor Bothello is collaborating with SLF to undertake research on informal micro-enterprises, building upon the SLF research legacy and data from the 2015 survey. Although our time in the field was brief, it was not so brief to see some major changes that have since taken place from the time SLF conducted a resurvey of businesses in 2015. Most of the interviewees that Prof Bothello met were interviewed in 2015. Some still remembered the researchers in yellow jackets riding bicycles and others had forgotten. In some cases, businesses had changed hands and yet in others cases a new member of the family had taken the reigns.

Nevertheless, most businesses still exist, more have come into existence and a few have diversified. At the time of the re-survey in 2015, the Spaza business seemed to be booming and doing very well in Delft South. Then, most of the shops were well branded, the volume of stock was huge and foot traffic clearly showed business was brisk. In the week that Prof Bothello conducted his research, it seemed as though the era of the spaza is either coming to its end, or is facing huge challenges. Could the opening of the new mall in Delft have sounded the death knell for the Spaza business sector? It was not easy to tell or conclude with any degree of precision without enough information.  The few grocery business owners we spoke to held this view but there could be other issues affecting this sector.

One other fascinating observation was the rate at which street trading has increased along main road. Although there was no time to get the exact data, clearly new businesses that were not there in 2015 have emerged.  There were many traders using bakkies to sell fruit and veg, especially around the new Goal Supermarket (formerly Spar) and new hardware shops seemed to have increased in main road.

The generally held view is that South Africans have been driven out of the spaza business sector but not much is said about the fact that they remain property owners for such businesses and are actually letting such property at a fee. Such as rents from shops are about R2000 and up. Opportunities to rent houses / flats might offer these home owners with a game changer. It is my view that house/flat rental is going to be the next biggest business in the township of Delft and elsewhere in the Western Cape townships. It is a game changer because unlike in the Spaza sector only locals own the houses and this eliminates competition. Delft is home to a huge community of foreign immigrants and new arrivals from other parts of South Africa. As such, there is a high demand for accommodation. One reason it is a choice of destination is that Delft is racially well integrated.

It is also a fact that Delft is one of the most violent townships in the Western Cape. As such, residents have to make a tough choice about their safety. Secure places cost more. This is what some homeowners are taking advantage of by building flats. Most migrants are willing to pay more as long there is security for themselves and their property. Homeowners with money are restructuring their properties into double storey flats to take advantage of this demand. Whether or not these double storeys comply with safety regulations is a subject for another day. This is lucrative business with fewer risks than running a spaza business or any other business in a township bedevilled by crime and gangsterism. The costs are incurred at the time of building and these are offset after a few years, as the rentals charged per room are quite high. Information obtained from two sources interviewed concurred that a single room is let for between R1700 and R2000. Some houses along main road have since been renovated and turned into office or business spaces.  What makes the spaces secure is the fact that in most cases the homeowner occupies the ground floor and so is able to monitor who comes in and who goes out.

Those with entrepreneurial skills are taking advantage of this property development to another level. Sihle is one such person who has seen a business opportunity from the growing demand for rental accommodation. He is establishing laundries in the townships. His view is that most flat residents are young and are working and therefore do not have time to do laundry. It is also a fact that the flats provide neither enough space to hang the washing nor are they built to offer such facility. Where the homeowner is also resident, water use is often a source of conflict. This is where Sihle’s business becomes important. Clothes take time to dry in winter and Sihle owns a big tumble-drier that he uses to help flats residents. Some bring washing only for drying and others bring mostly linen. He has had to close his fish and chips business to respond adequately to the new demand that the rental business has given rise to.

 

During the course of our field research, we spoke with a shebeen owner, who is even considering closing the business and convert the structure into rental flat. He already has built rental flats in Gugulethu where his grandmother owns property.

‘My children are growing up, every time they see me getting arrested for operating this shebeen. It is embarrassing that they see all this happening. Maybe they now think I am a criminal. I want to quit this business and build flats.’

With almost everyone with resources building high rising flats, it remains to be seen if this is going to be sustainable as a business.

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