DURBAN – While wealthy and foreign buyers have taken some time out from the Atlantic Seaboard market, locals are using the opportunity to snap up property in the lower price categories.
Ross Levin, managing director for Seeff Atlantic Seaboard, Waterfront and City Bowl says there has been strong demand for property below R5 million, predominantly apartments, accelerating slightly over the last two months.
Almost R1 billion of this year’s sales for the Atlantic Seaboard and City Bowl fall under the R5 million price mark, and he said that most of these deals have been concluded in well under three months.
In contrast, sales above R15 million on the Atlantic Seaboard and R10 million in the City Bowl remain slow.
Only 29 deals have been recorded above this level for the Atlantic Seaboard with only 18 of those above R20 million. Just three of the top-end (R20m-plus) sales were to foreign buyers and only three of the highest prices paid have been to non-Cape buyers.
Sectional title sales are dominating the market, accounting for well over 75 percent of all units sold and over 55 percent of the value generated in the market this year.
The highest prices achieved on the Atlantic Seaboard include R60m for a house in Fresnaye, R58,5m for an apartment in Bantry Bay and R45m for a house in Clifton. This says Mr Levin is nowhere near the levels of 2-3 years ago when sales of R100 million to R290 million were concluded.
The rentals market though continues to deliver excellent results with Seeff agents achieving rentals of R110,000/month in Fresnaye and R170,000/month for a house in Bantry Bay.
While frustrating for sellers, the upside is that buyers have plenty of choice and favourable buying conditions. There can be no better time to invest here than right now as you are essentially buying at last year’s prices, and when the market turns, you can look forward to excellent capital value growth as was well demonstrated during the 2014-2017 mini-boom period.
Attracting new buyers
Levin said that the City of Cape Town Tourism is doing a pretty good job of promoting the city and the good governance is another positive attraction for investment into property.
He added that wealthy buyers (all buyers actually) and foreign investors need a stable and growing economy, political certainty and security of property investments which are key to attracting investment into property (and the economy).
Levin said that it is important to attract wealthy and foreign buyers because they generate substantial property taxes for government
"They generate substantial property taxes for government. Often, they also renovate and extend and there is a whole chain of economic benefits and job creation that result. Foreigners also bring direct foreign investment into the country. You have to sell a lot of R2 million houses to generate the same property taxes (transfer duty) that you would on a R20 million sale on the Atlantic Seaboard," said Levin.