One in four Atlantic Seaboard properties vacant due to impact of Covid-19
Cape Town - One in four properties along the Atlantic Seaboard, usually the playground of the rich who are renting and buying property, are standing empty - a direct result of the coronavirus pandemic that has kept overseas visitors and investors away.
The vacancy survey 2020 for Q4 was compiled by TPN Credit Bureau, specialists in property market trends.
TPN Managing Director Michelle Dickens said empirical data was sought to reach these figures. Data is collected monthly from clients, estate agents and landlords. This is then used to establish market trends.
Dickens said the Atlantic Seaboard is battling with a high vacancy rate of 24.44%, and that 60% of properties are investment properties (holiday homes or buy-to-rent).
The average monthly rent for a two-bedroom sectional title unit is R25 000, and the average rent for a three-bedroom, full title house is R38 000.
RE/MAX Living’s Marius Jordaan said prior to the pandemic, directors from American companies with offices in South Africa, would visit regularly, particularly the Food and Drug Administration and regulatory bodies who would come for inspections and audits on a regular basis. This, however, ceased after lockdown restrictions were implemented in March.
“While these directors were visiting South Africa, they would often hunt for possible holiday homes or part-time homes to stay in while they’re down here; none of this could happen under the travel restrictions,” said Jordaan.
Seeff Atlantic Seaboard and City Bowl managing director Ross Levin said vacancy rates were likely to only improve once tourism was back in full swing and the economy picked up in terms of rental rates increasing.
Rawson Properties Green Point franchisee Taryn Murphy said the findings derived from the survey were ‘fairly accurate’.
“In most of South Africa, the real estate market has been relatively unaffected by Covid-19. Most realtors have, in fact, experienced a boom in property activity. This is largely due to the very low interest rates, which have allowed previous non-contenders to enter the property market.
“This, unfortunately, is not the case on the Atlantic Seaboard. The Atlantic Seaboard is geared around tourism and Covid-19 has obliterated the tourism market,” said Murphy.
“Property prices are high on the Atlantic Seaboard, and the reason they are this way is because of the short-term rental/ Airbnb market, which allows property owners to charge high prices per day (especially in high season) for the use of their properties.”
He said the market had missed the high season on the Atlantic Seaboard, also contributing to the high vacancy rate.
Murphy said that the market’s recovery was largely dependent on how fast and effectively the government rolls out the Covid-19 vaccinations.
“When people feel safe to travel, then we suspect that the Atlantic Seaboard will start recovering.”
Cape Chamber of Commerce and Industry President Janine Myburgh said the luxury end of the market, like the Atlantic Seaboard, was expected to carry the brunt of limited international movement in Q4.
“Compounding that is the general malaise in the economy affecting higher-priced properties. The summer months are our tourist season, and that takes up a relatively large part of occupancy, and sales where the dollar would buy extensive luxury not easily available elsewhere. But with the absence of the dollar- and euro-based traveller, this market is virtually dormant.”
Senior economist Craig Lemboe said: “In many cases rentals for these properties are well above what is affordable for the average income earner, and as such, if rental prices were to fall to accommodate the local market it would have to do so dramatically. I can’t see that realistically happening.
“However, should conditions for international travel improve (and this assumes that the pandemic is under control here and internationally), there would be renewed interest in the Western Cape, and specifically the Atlantic Seaboard,” said Lemboe.
Economist Mike Schussler said it would take the market around three to four years to re-adjust itself. “It's impossible, we don't know how long. We can't model people's fears and disease outcomes and the lockdown.”