DURBAN – Owing to the fact that there is a much smaller pool of potential buyers who can afford these kinds of homes, luxury listings are often the trickiest to sell.
If you are a buyer who is looking to make a multi-million rand investment in South African real estate, it is therefore advisable to narrow your search to the most popular suburbs for multimillionaires to increase your chances of closing a sale when you ultimately decide to sell.
Historically, the luxury market (classified as homes priced over R3 million) makes up the smallest portion of all transactions recorded at the Deeds Office. To quantify just how few sales occur within this market segment, of the 57 338 transfers recorded during the first quarter of 2019, just 3,094 properties were priced over R3 million. Purchasing within the right suburb is therefore key to generating a return on your investment when dealing in multimillion rand properties.
However, according to the RE/MAX National Housing Report for Q1 2019, the luxury market is showing some positive signs of growth this year.
"Properties over R3 million grew to account for 5.4 percent of all transactions this quarter, which is the largest this segment has been since the third quarter of 2017 at 5.62 percent," said Adrian Goslett, Regional Director and Chief Executive of RE/MAX of Southern Africa.
He added, "As investors become more certain that things will remain stable now that the elections have come and gone, we are likely to see a slow but steady increase in market activity over time, causing long term price appreciation that keeps up with buyers’ growing demand. Investors who purchase real estate now therefore stand to be the envy of those who wait too long for the market to swing back in favour of sellers".
Consequently, the South African real estate market currently offers great potential for investors – especially for those who purchase within the luxury market suburbs.
To help investors decide where to invest their money, the AFRASIA Wealth Report 2018 revealed the most popular suburbs for multimillionaire residents in both Cape Town and Johannesburg. According to their findings, Camps Bay & Bakoven tied for first place for Cape Town, with a total of 80 multimillionaire residents.
The city bowl followed at a close second at 70 multimillionaire residents. In Johannesburg, Houghton placed first at 130 multimillionaire residents, with Sandhurst following at 120 and Hyde Park with 110 multimillionaire residents.
"The key with these kinds of investments is to work through a reliable real estate professional who is qualified to handle multimillion-rand transactions and can advise buyers on where to look when making these sizable investment decisions. The RE/MAX Collection, our luxury listing portfolio, has recently been revamped to keep in line with international standards and to better assist luxury buyers and sellers. I would therefore recommend The RE/MAX Collection website as a good place to start when investigating luxury investment options," concluded Goslett.
BUSINESS REPORT ONLINE