By Helen Bamford

A Londoner has bought what is believed to be the most expensive piece of under-developed real estate yet sold in Africa - and it's in Cape Town.

At R16 605 a square metre, it should at least be paved with gold. But the tiny plot has a derelict bungalow on it and little else so, in effect, the extravagant price was for the land only.

But the land also happens to be only a few metres from the sea, a couple of steps up from Clifton's fashionable Third Beach.

The last council-owned bungalow in Cape Town was sold to London-based property developer Amir Damji on Friday for a cool R4,5-million.

It was the holiday house of business tycoon Michael Katcs, the chief executive of Venter Trailers who murdered his wife and shot himself in his luxurious home in Sunninghill, Johannesburg, last year.

Katcs leased the bungalow from the council.

Damji, who lives half the year in London and the rest in Fresnaye, Cape Town, said he planned to renovate and then sell the bungalow.

"I believe it is a good buy, but prices are getting a bit high along the Atlantic seaboard. I think they will peak soon."

Damji said he also had a beachfront property at Misty Cliffs, between Scarborough and Kommetjie, and had invested R15-million in property along the Atlantic seaboard in the past three months.

The auction of the derelict bungalow attracted interest from around the world, but when it came to the crunch the bidding lasted just a few minutes.

Auction Alliance's chief executive, Rael Levitt, said he was more than happy with the price.

"It's a record. The last bungalow we sold in Clifton went for R3,4-million two years ago."

In effect, the price was for the land only as the house is practically worthless and will have to be rebuilt completely. Other more expensive properties in the area have had luxury houses built on them and therefore cannot be compared.

Laurie Wener, Atlantic seaboard area manager of Pam Golding Property, said: "The top of the range is between R16 000 and R20 000 a square metre. We have a bungalow at Bakoven on the market for R15-million at the moment."

She said property along the Atlantic seaboard, all the way to Hout Bay, was simply "cooking" at the moment.

Wener said she sold a Bakoven bungalow for R5,3-million two days ago.

"Bungalows are a niche market. People are prepared to wait for them. It's the lifestyle they're after."

Levitt said the annual rates on the Clifton bungalow were R25 224 - about R2 000 a month.

He said the new owner could renovate and upgrade the property, but any building work would have to have the approval of council and the Clifton Bungalow Owners' Association.

"It also has to remain within its existing envelope - it can't go up five storeys for example."

There are even rules governing the plants and trees on the property - nothing must be cut, pruned or damaged without consulting the council. And no animals or reptiles are permitted except one dog or one cat.

Levitt said that while at the moment these sites were South Africa's most expensive real estate with the highest demand, 100 years ago they were established and leased merely for camping, and only tents were allowed.

During World War 1 Clifton was identified as a potential harbour.

"But after the war a housing shortage in the Cape resulted in temporary structures being permitted on the Clifton and Bakoven beachfront sites."

The sites were rented in terms of 99-year leases and in the late 1980s and early 1990s the city offered the land to the tenants at market-related prices.

Levitt said some tenants chose to opt for 20-year leases with the option to apply to buy at the end of the period, but could also sell the rights to their leases.