Why South Africa's townships are prime for property transformation

With the right approach, South Africa’s townships can be transformed into vibrant, functional and attractive communities. 

Making a township property attractive not only uplifts the area, it can also translate into greater profitability for property entrepreneurs, says Nqobi Malinga, uMaStandi portfolio manager for Johannesburg. 

This was because townships have historically been perceived as areas with limited resources and opportunities. 

Township property potential

As someone who has spent years working in urban development, Malinga says that she has seen firsthand the potential that lies within the country’s townships.

She says by developing properties with care and with their tenants’ needs top of mind, property entrepreneurs developing in the townships can reap the benefit of offering quality real estate.

“For instance, while rentals for affordable housing are often around R2 500, high-quality township properties can earn between R3 500 to R4 500 for an apartment.

"In fact, within the affordable accommodation sector, uMaStandi has observed that tenants are prepared to pay an additional R1 000 to R2 000 for properties offering sought-after features,” says Malinga. 

uMaStandi, a property financing company, says it is extremely important that property entrepreneurs bear in mind that their tenants are people first and cater to them accordingly.

It adds that there is some psychology behind creating a property that is not just four walls and a ceiling, but is an attractive, livable space.

“Tenants, as all people do, want a haven from the world and a place that they can feel safe and happy in. Having a home that is of higher quality can fill tenants with a sense of achievement and pride.

"Offering tenants a place that goes beyond meeting their basic needs for survival and security, but their emotional needs as well, makes it more likely that they will stay in their residence for a longer term, thus ensuring greater retention and less tenant churn.”

With this in mind, the portfolio manager says there are several key factors in properties that command higher rentals.  

For starters, Malinga says in these properties, size matters - it seems that unit sizes of 25 square meters are the sweet spot for bachelor or one-bedroom units, allowing renters to enjoy a larger queen-sized bed and entertainment area, as well as a desk. And be sure to use the space well.

She says an effective way to make any unit more attractive is by using natural lighting.

“Building with large windows in the right places, particularly in bedrooms and lounge areas, helps bring in ventilation and light, thus elevating the living space. Additionally, high-quality properties must be kept clean and well-maintained.”  

Secondly, she adds that having one’s own facilities and an independent kitchenette, rather than having to share a bathroom and kitchen, are significant drawcards and features that people are willing to pay a little more for.  

Thirdly, the company says entrepreneurs should think in terms of tenant convenience for utilities and facilities. It says reliable water and electricity services, along with fast Wi-Fi, are similarly essential for tenant satisfaction.

“Safe and adequate parking is also important, especially for young professionals or those for whom their car is a part and parcel of their work.

"Furthermore, ensuring that your township property is safe and secure will make it more attractive to potential tenants. This can be achieved through well-lit streets and secure fencing.”  

Finally, the uMaStandi portfolio manager for Johannesburg says they would encourage property entrepreneurs to invest in energy-saving measures to offset the rising costs of electricity.#

“One way to do this is to use energy-saving lightbulbs throughout the property and implement prepaid meters for electricity and water. And if geysers are shared, include a timer switch to manage the electrical demand for heating of water.” 

While it is certainly possible to achieve slightly higher rentals in the affordable housing space, Malinga says it does come with a considerable amount of effort and intention; from planning to design, building and finishes.

“However, it is well worth it, not only because it makes for a higher level of profitability, but also because it uplifts the whole area, contributes to urban regeneration and enables people to enjoy a higher standard of living.” 

SA's township property role

Last month, Hayley Ivins-Downes, Lightstone managing executive real estate & director at Prop Data, said that understanding the township dynamics is critical, because the future of South Africa’s property market is as much about townships as it is about cities.

She said these sprawling communities are home to significant portions of the urban population, and theirs are the untold stories frequently omitted from mainstream property narratives. 

Lightstone used the three provinces with the highest GDP and then identified the largest cities in each before selecting the most populous township in each. Data was then examined to compare the townships' population size, household income, property values, and property transfer activity. 

According to Lightstone’s data, Soweto, near Johannesburg, is South Africa’s most iconic township and is home to around 1.5 million people. Its roots can be traced back to the early 1900s before being formally named as South Western Township in 1963, and it’s known today for its vibrant cultural life and thriving tourism industry. 

Umlazi, located in Durban, has around 486 000 residents and features a mix of urban development and poverty. Umlazi was created in the 1960s and is Durban’s largest township.  

Khayelitsha, on Cape Town’s outskirts, is one of the fastest-growing townships and has around 520 000 residents.

The township is characterised by informal housing and strong grassroots activism, and it’s important to bear in mind that Khayelitsha is the youngest of the three townships, founded only in the mid-1980s as an apartheid-era relocation zone.  

Ivins-Downes said all three reflect South Africa’s complex socio-economic legacy, marked by inequality, resilience, and community spirit.

“Despite challenges like unemployment and crime, these townships are hubs of innovation, culture, and emerging entrepreneurship, and are playing an important role in the country’s evolving urban landscape.” 

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