Lessons from Lemon Tree Apartments About Investment Property

Lemon Tree Apartments has sold out and is no longer available for purchase directly from Central Developments. This page is kept live as a case study, because the numbers below are one of the clearest real-world examples we've published of how to calculate net rental yield on a tenanted apartment. If you want to see which developments are currently open for investment, read the where to invest now section of this post.

Why tenanted apartments make attractive investments

When Lemon Tree Apartments in La Montagne, Pretoria East, was selling, it offered investors something specific: the option to buy a unit with a pre-qualified tenant already in place. That structure is still common across several Central Developments properties today, and it's worth understanding why it works in an investor's favour.

• You get an immediate income. Buying an already-tenanted flat means rental income starts from day one. Established tenants are also less likely to request expensive improvements than new tenants might, so net returns are usually higher than on an initially vacant buy-to-let property.
• You can check the tenant's payment history. Non-payment of rent is one of the most stressful situations a property investor can face. Buying tenanted stock lets you verify that a tenant has been paying on time and in full before you commit.
• You save on advertising and agent fees. Sourcing new tenants costs time and money. A tenanted unit skips that step entirely.
• You avoid upgrade costs. There's no need to paint or refresh the unit to make it tenant-ready, since someone is already living there happily.
• Buying directly from a developer removes hidden costs. When you buy a tenanted apartment directly from a reputable developer like Central Developments, transfer, bond registration, and attorney fees are usually included in the purchase price upfront, with no surprise extras later.

How to calculate net rental yield (with a real example)

Net rental yield tells you whether a property is actually a good investment, or whether it's overvalued. As a rule of thumb:

• 2–4% yield: largely a sign the property is overvalued
• 5.5%+ yield: generally considered attractive, with more stable cash flow
• 6.5–9.3%: the range the Global Property Guide identifies as a good net rental return in South Africa

Here's the formula:

• Add up the total annual rent you'd charge a tenant.
• Deduct annual expenses: levies, rates, taxes, and so on.
• Divide that figure by the property's purchase price.
• Multiply by 100 to get your net rental yield percentage.

Worked example, using a real Lemon Tree Apartments unit:

A first-floor, two-bedroom apartment was purchased for R795,000.

• Step 1: (R7,350 - R1,034 - R450) × 12 = R70,392 annual net income
• Step 2: R70,392 ÷ R795,000 = 0.089
• Step 3: 0.089 × 100 = 8.9% net rental yield

At 8.9%, that unit sat comfortably inside the range the Global Property Guide flags as a good return in South Africa, which is exactly the kind of number that made Lemon Tree sell out.

Curious what your own numbers would look like? Estimate your bond repayments and transfer costs with our free calculator before you make an offer.

Where to invest now

Lemon Tree may be sold out, but Central Developments has other apartment developments currently open for investment across Pretoria and Centurion:

• Woodlands Place: Apartments in Woodhill, Pretoria East, the closest match to Lemon Tree's original location.
• King's Cross @ Castle Gate Residential: Apartments and houses near Waterkloof Ridge, Pretoria.
• Knight's Court @ Castle Gate Residential: Apartments in Waterkloof Ridge, Pretoria.
• Eden Estate: Apartments in Pretoria North.
• Colorado: Apartments and houses in Centurion.

See the full list of current investment properties.

Frequently asked questions about Lemon Tree Investments

Is Lemon Tree Apartments still available to buy from the developer?

No. Lemon Tree Apartments in La Montagne, Pretoria East, has sold out and is no longer available for purchase directly from Central Developments. Units do occasionally become available on the resale market through estate agents.

What is a good net rental yield in South Africa?

According to the Global Property Guide, a good net rental yield in South Africa normally falls between 6.5% and 9.3%. Yields below 4% can indicate an overvalued property, while yields above 5.5% are generally seen as attractive to investors.

What are the benefits of buying a tenanted investment property?

Immediate rental income, a verifiable tenant payment history, no advertising or agent costs to find a new tenant, and no need to spend on upgrades before the unit can be rented out.

Are transfer and bond registration fees included when buying from a developer?

When buying directly from a developer, transfer, bond registration, and attorney fees are regularly included in the purchase price, avoiding unexpected extra costs. However, this varies by development, so confirm details with the specific development you're considering.