About 10-million people — nearly 20% of the population — are believed to rent a backyard room in townships or informal settlements across South Africa.
At an average monthly rental of R1,200, the sector is estimated to generate R12bn in annual revenue. Yet the township market is informal and unregulated, with few if any structures in place to protect the rights of landlords and tenants.
Modicai Mnculwane, who has worked the past 12 years in Joburg’s property management industry, hopes to change this. He recently started RoomKing, an online platform that connects landlords and tenants across townships.
The platform went live on June 1 with 2,200 listings. RoomKing already has a presence in 18 districts across Gauteng, including Soweto, Tembisa, Vosloorus, Cosmo City, Protea Glen, Alexandra, Thokoza, Sedibeng and Daveyton.
Mnculwane plans to launch the platform in Mbombela this month and in Cape Town in September. “By year-end we want to be in all nine provinces, and have at least 10,000 rooms listed on our website,” he says.
He eventually landed three jobs, working in a bakery during the day, as a security guard at night and as a driver over weekends. That enabled him to save money to enrol for a national diploma
Originally from Ntabamhlophe, near Estcourt in KwaZulu-Natal, Mnculwane completed high school in the late 2000s and moved to Joburg to find work. He eventually landed three jobs, working in a bakery during the day, as a security guard at night and as a driver over weekends. That enabled him to save money to enrol for a national diploma in public relations management at Damelin.
In 2011 he opened a shisanyama in the Maboneng district in the Joburg CBD, where he met the owners of property management firm Mafadi. The firm managed, among other properties, a large portfolio of rental flats in the Maboneng precinct. That year Mnculwane joined Mafadi as a letting agent and started working his way up the ranks.
More than a decade on, he’s still involved on the management side of the Mafadi business. But about a year ago he started toying with ideas for a new venture. Mnculwane knew the backroom rental market wasn’t professionalised or properly serviced. And given his exposure to the property letting and management industry, it was a no-brainer.
“I am a boy from the kasi and very passionate about where I grew up. I was keen to start a business that finds solutions for township problems,” he says.
Most people looking to rent in a township must physically crisscross the neighbourhood to find ads on retail store noticeboards. “RoomKing takes the hassle out of this process by providing tenants with a central portal to search for rooms and compare prices.”
Mnculwane says that the passing of the Gauteng Township Economic Development Act last year provides impetus for his venture. The act aims to promote opportunities to help build township economies. “There’s no doubt that the next big thing in South Africa’s property market will be initiatives that support township growth and development,” he says.
Venture capital firm Buffet Investments has bought into Mnculwane’s vision and is RoomKing’s financial backer. Mafadi provides logistical support to run the online portal. Neither landlords nor tenants pay to use RoomKing’s platform, but Mnculwane plans to generate revenue through the provision of add-on services and third-party advertising.
Monthly rentals for RoomKing’s listings vary between R800 and R1,500, which gets you a room of about 12m² on average. The rent usually includes access to a communal tap and toilet.
Landlords typically generate gross annual income yields of 20%-25%. “It’s a very lucrative segment of the market and there’s huge demand as it caters to people with a monthly income of roughly R1,500-R3,500 — the income bracket that most South Africans fall into,” Mnculwane says.
He believes formalising the backroom market will not only make it easier for tenants to find rooms but also prompt landlords to offer better facilities at more competitive rentals. He also plans to introduce leasing, management and legal services to portal users.
“It’s quite common for landlords to cancel leases without due process while tenants often abscond without notice,’’ he says. “So there’s a huge opportunity to better regulate the market and help protect the rights of both parties.’’
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