The Big Backroom Boom

There's an intimate story on these pages. Of life in Johannesburg's suburban sprawls; the moody and mighty townships that thrive from dawn to dusk, bearing within them the dreams and secrets of a city on its way up, never failing to look at itself, into its beaten soul and the great backstories of survival. The billion-dollar-plus backyard rental industry is one such, making room for hope and dignity where there often is none.

It t’s a big reality, the ubiquitous yet mostly under-the-radar ‘backroom rental market’ in South Africa’s informal economy.

And it’s a big answer to a bleak issue – limited housing.

Add to that the unlimited problems of unemployment, poor government service delivery and consistent rolling blackouts that cast long shadows of despair.

But there is an unspoken language of resilience or sub-text in these economies.

Where the system fails, there is room for creativity, literally, and therein exists a billion-dollar rental market for ‘the room in the back’.

According to a 2022 report by financial services provider Rand Merchant Bank, this market is neither taxed nor monitored by the government. Although this is cause for concern, Roger Wilco’s 2022 Township CX Report states that the sector’s total market value is estimated to be R900 billion ($48 billion) with approximately 60% of the market considered formal and 40% informal. Over R20 billion ($1 billion) of that is the backyard rental market space.

“I think it’s potentially double that, but let’s just stick with R20 billion; over and above that there is another R25 billion ($1.3 billion) a year earned from spaza (shop) rentals,” GG Alcock, the South African author of KasiNomics, says to FORBES AFRICA.

KasiNomics emerged as a book from the insights, practices, and case studies of the township economy. “And here is the thing, if someone comes to you and asks you if you are unemployed, you are going to say ‘yes’ but meanwhile you are renting out a backroom for let’s say R9,000 (taxfree) ($480) but you will still say you are unemployed.”