 A big shout out to private property for this groundbreaking virtual property show. In today's session, I want to showcase some interesting insights that I found in some rental suburbs in South Africa and to show how the data points weave together to tell us a story about that particular suburb. As an investor, you might be interested in achieving capital growth. Maybe you are driven by income yield. Maybe you're a little risk adverse and you're looking for suburbs with low tenant delinquencies and low vacancies. Or maybe you're limited by affordability and that drives the areas that you can invest in. So for today's presentation, I've chosen to look at sectional title properties. I'm going to showcase a 20-year time series on the Western Cape, Khaaten, KwaZulu Natal and the Eastern Cape. And as a starting point, we're going to look at the average market value. Going back to 2006 during that property boom period, and we can see property prices escalating to 2007 and then flatlining out in 2008-2009 during that global financial crisis period. And from the Western Cape's perspective, we can see lift-off from around about 2011 as property prices really escalated faster than any other province in the country, slowing down again in 2018 as immigration slowed down as the drought hit and property prices slowing down, currently sitting at 1.3 million rand for a sectional title property in the Western Cape area. KwaZulu Natal, similar story, although a little bit later to the party compared to the Western Cape, property prices increasing from around about the 2014 period right up to 2019 and coming off the boil in the last 12 months, currently sitting at just over a million rand for sectional title properties in the KwaZulu Natal area. Khaaten, much slower property market value increases, currently sitting at 830,000 rand in the Eastern Cape, sitting at just below 700,000 rand for sectional title properties in the Eastern Cape. Let's then look at from an investor's perspective, what's happening in the rental market from an average rent perspective, and we're going to change to average rent, and we're going to watch, for example, in the Western Cape in 2010, the average rental price sitting at 4,000 rand actually below that of Khaaten and KwaZulu Natal and those prices increasing, trying to keep up with the market value increasing, driving up there for the average rent in the Western Cape area, sitting in the 2018 period at 8,700 rand on average, coming off the boil a little bit to 8,500 rand. KwaZulu Natal, similar, those prices escalating, trying to keep up with that market value escalation, average rental price in the KwaZulu Natal area of 8,000 rand for sectional title units, in Khaaten for 7,200 rand for sectional title, and the Eastern Cape 5,800 rand for sectional title property. So how does the average rent and the market value determine your gross yield? As you know, the annualized rent of a property divided by the market value gives us our gross yield. So if we were having a value of rent, which was 1% of market value, that would always give us a gross yield of 12%. Let's run the numbers quickly. If we look at that data and we take, for example, a 4,000 rand rent per month, we annualize that times by 12, we get 48,000 rand. If our market value was 400,000 rand, that would give us 48,000 divided by 400,000, 12% yield. Rental value, 4,000 rand, 1% of market value, 400,000 rand will always give us a gross yield of 12%. What that means then is, as I can get my rent higher than 1% of market value, so if I can get my rent to 4,500 rand and my market value remains at 4,000 rand, that is going to drive my gross yield higher than 12%. But as my rent dips below 1% of market value, so my rent is only 3,500 rand per month of market value, 400,000 rand, my gross yield is going to dip below that 12% mark. So let's have a look at our gross yield then across these different provinces. And we can see that Western Cape had the highest market value, the rent trying to keep up with that market value in escalation. But as it turns out, simply not achieving, we weren't able to achieve on average in the Western Cape 1% average rent to market value and Western Cape sitting at 8.8% gross yield for sectional title properties in the Western Cape area versus our Hanting properties which are sitting at 11.2%. Remember, we were achieving about an 830,000 rand average market value and our rent sitting at just below 8,000 rand as well, which maintained us close to that 12%. Hanting, clearly performing best in terms of our gross yield, but what about delinquencies? And if we then have a look at our good standing, we can see that the Western Cape performs best 86% of their tenants in good standing. The Eastern Cape also doing nicely at 86%, but Hanting dropped right down to 80%. So 20% of Hanting property, Hanting tenants are delinquent tenants. And so you've got that risk and reward that you have to play off high reward, high yield, but you have to manage those tenant delinquencies. That's from a provincial perspective when we now understand how those different data points weave together to tell us a story. So I'm going to showcase some interesting suburbs. And we're going to start with the Western Cape and we're going to start with C points. And I chose C points because watch how the market value is added in there. Let's watch that market value. So we're going to start with the market value. And the market value in 2010 was sitting at around about one and a half million Rand for sectional title properties in C point. Lots of construction, new builds, expensive properties going up in the C point area. And watch that market value increasing all the way up to 3700 Rand. Now in order to achieve, sorry, 3.7 million Rand. Now in order to achieve a 12% yield, those properties would have to be renting for 37,000 Rand per month. So let's have a look then at our average rent. And we can see that the average rent only 15,600 Rand. That is half a percent of what the market value is. And I'm sure you've all worked out then that the yield sitting at a very low 5.8% for properties in the C point area. Let's showcase that against Stellenbosch. And the reason that I chose Stellenbosch is because Stellenbosch was an area that during the lockdown period achieved the highest good standing ratio. So the good standing ratio in the Stellenbosch area, very low tenant delinquencies and we were sitting at 93% of tenants in the Stellenbosch area in good standing with their rent, very low delinquencies. Then I've decided to showcase that against an area that achieved for the Western Cape province, one of the best performing in terms of yield. And so let's have a look at Bulbul. In our Bulbul area, we're going to have a look at starting with our market value. And you can see C points sitting up here at 3.7 million Rand. Maybe, as I said, you're limited in terms of your affordability. So C point is not the area that you're going to invest in. Stellenbosch, the average market value at 1.9 million Rand and down in Bulbul sitting at just over a million Rand in terms of your current investment, average market value of sectional title properties in the Bulbul area. So we're having a look at our market value. We're going to have a look at our average rent. And we can see that our Bulbul properties are achieving pretty similar rents to our Stellenbosch properties on average. And yet, Stellenbosch properties were sitting at nearly 2 million Rand and Bulbul properties only at 1 million Rand. And so no surprises then in terms of our average yield. Our Bulbul properties achieving nearly 11%, 10.73%. Again, if you were chasing capital growth from a market value perspective, C point absolutely would have given you capital growth. Remember, you need to exit the property in order to achieve your capital growth. So C point now sitting at 3.7 million Rand coming up from 1.5 million Rand. If you are chasing income growth, then our Bulbul area achieving better for us in terms of our gross yield at nearly 11%. And if you have tenant delinquencies and you are a little bit risk adverse. To be honest, Western Cape is a hold it really, really well. So Bulbul sitting at 86% C point sitting at 91% and Stellenbosch sitting at 93%. So let's have a look at a different province. Maybe you are interested in properties in Quasalina Toll. And so I'm gonna choose Omschlange. And the reason I've chosen Omschlange is because this was one of the areas that achieved the best good standing ratio from a rent collection perspective. And I'm gonna showcase that against Durban. Because Durban gave us the best yield in the Quasalina Toll area. So we're gonna start again. Let's start at our market value. And you can see that Omschlange kind of sitting at 1.8 million Rand. Coming off from 1.6 million Rand in 2016. So we definitely have some capital appreciation, some capital growth there. Quasalina Toll 680,000 sitting at 749,000. So from an affordability perspective, an area that is still affordable. From the average rental perspective, Omschlange properties, the rental there sitting at 11,000 Rand. Actually having come off a little bit of the boil there, a couple hundred Rand. And Durban sitting at 6,500 Rand average rental. What does that mean from a yield perspective? Our Durban properties yielding 11.6%. And our upper end of the market yielding 7.4%. So remember, as the property prices increases and the properties become more expensive, it's difficult to reach that 1% of market value for average rent. And that drives the yield down. And as the properties become more affordable, you're able to maintain a 1% of market value for rental price. And that helps drive your yield up to 12%. From a good standing perspective, Durban, a difficult area to collect rent in, only 75% good standing. And Omschlange sitting at 81%. Do remember that I talk about averages here. So where I say Durban on average, only 75% of the tenants are in good standing, by placing a quality tenant, you can overcome that risk. So if you are diligent in selecting only quality tenants for your property, your risk of default reduces. So you are in control of that risk. Let's go now have a look at Khating. And the areas that I've chosen in Khating, I've chosen Centurion. And the reason that I chose Centurion is because this was an area that had really good rent collection during the lockdown period, maintaining above 90% collection. And also it had very low vacancies, only 5.5% vacancies within the lockdown period. And I'm going to showcase that against an area called Pretoria West. Pretoria West. Pretoria West is an area where, if we have a look at the market value, is a really affordable area to get into from a market value perspective. And you can see that sitting at 341,000 rand for the average market value currently, Centurion currently sitting at 850,000 rand. If we compare that against the average rent in the area, you can see that Centurion sitting at 7,300 rand, and Pretoria West sitting at 4,500 rand per month. So no surprises when we look at the gross yield, if Pretoria West's average rent is 4,500 rand and the market value is only 340,000 rand, we can definitely expect to see the gross yield then for Pretoria West to be over 12% and let's have a look at what it achieves. Pretoria West, from a yield perspective, achieving 15% at the moment. Coming off the boil a little bit because the market value increasing faster than the average rental value was increasing, but still a 15% gross yield compared to Centurion sitting at 10.65%. So remember, it's not just about the yield, it's about the good standing and let's have a look at the risk in those two areas. Pretoria West, although you can achieve a 15% gross yield, we do have higher delinquencies at 20%, 80% good standing versus, as I said, Centurion sitting at around over that 90% good standing ratio even in the lockdown period. As an investor, it's important to understand the different data points and how they weave together to tell a story. I've showcased some interesting suburbs in South Africa, but I'm sure you're interested in suburbs closer to where you're currently invested or looking to invest. Come visit us at our shop to see all the information about your particular suburb. To visit us, simply go to shop.tpn.co.za.