Why investors are looking beyond Cape Town for better rental returns

Johannesburg – Property investors in Gauteng are generally achieving higher rental yields than their counterparts in the Western Cape, largely because properties in the province are cheaper while rental income remains relatively strong.

This is according to a new analysis by Codera Analytics, which examined property prices and rents across suburbs in Gauteng and the Western Cape.

Codera said its analysis focused on gross rental yields, which measure annual rental income against the property’s assumed value before costs and taxes are taken into account.

“For houses, for example, a larger proportion of properties available in Gauteng would imply rental yields of around 8% or more than in Cape Town,” the analytics firm said.

It added that Gauteng also tended to offer stronger returns on apartments.

“Based on current pricing, Gauteng rental yields also tend to be higher on average for apartments, since properties are cheaper on average,” Codera said.

Full title properties 

The analysis found that rental yields were particularly attractive in lower-priced Gauteng suburbs, where rents can represent a larger proportion of property values than in the Western Cape.

The difference highlights the trade-off facing property investors: while the Western Cape has enjoyed strong property-price growth and rental demand, higher purchase prices can reduce the income return generated from a property.

Data from Property Professional similarly showed that Gauteng’s sectional-title gross rental yield remained above 12% at the end of 2025, compared with less than 10% in the Western Cape. Full-title properties in Gauteng recorded a gross yield of 7.1%, while the Western Cape was at 7.8%.

The rental market has nevertheless remained stronger in the Western Cape in terms of rental growth. According to Seeff Property Group, the Western Cape had the country’s highest average rent at about R11,894 a month, compared with R8,900 in Gauteng. Western Cape rents were growing by 6.8% year on year, compared with 3.2% in Gauteng.

Assessing rental investments

More recent data from the Global Property Guide also points to strong returns in Johannesburg. Its latest figures put the average gross rental yield for Johannesburg apartments at 13.47%, compared with 9.49% in Cape Town.

The figures underline the importance of property prices when assessing rental investments. A higher monthly rent does not necessarily translate into a better investment return if the purchase price of the property is substantially higher.

For investors, Gauteng’s combination of lower entry prices and comparatively strong rental income could therefore offer a more attractive income-generating proposition, while the Western Cape continues to benefit from strong demand and rental growth.

Codera cautioned, however, that its figures represent gross rental yields and do not account for costs such as maintenance, rates, taxes, vacancies, insurance or property-management fees.

The actual return to an investor would consequently be lower than the headline gross yield.