Weak rand, lower inflation outlook fuels buying frenzy on the Atlantic Seaboard

Buoyed by the weak rand and lower inflation outlook, buyers have over the past summer hedged their bets on the Atlantic Seaboard snapping up 57% more property compared to the December-February 2014 period according to Ian Slot, Seeff’s managing director for the area.

Sales recorded by Propstats for the total market amounted to about R1.5bn (199 units) compared to R958 million over the previous summer period.

Unpacking the summer sales data, we note that aside from brisk local and foreign buying, demand was boosted by no less than 14 sales at R20 million-plus worth almost R590 million, says Slot.

February was the best month, accounting for sales at just over R601 million, up by 73% year-on-year from R348 million last February and includes seven sales above the R20 million. Top end prices are also edging ever higher. Where a few years ago, a property sold for R20 million made headline news, homes are now selling for well above R30-R40 million.

Two top end sales have also just breached the R100 000/sqm mark - a 300sqm flat in Clifton (Heronwater) that sold for R36 million at R120 000/sqm and two adjacent units (468sqm) in the new Amalfi development on Beach Road in Mouille Point that sold for R78 million at R166 667/sqm. Both to Nigerian buyers.

The average sales price as at February for the Atlantic Seaboard as a whole now stands at R9.4 million, 59% more than last February, largely as a result of stronger demand for higher valued properties, says Slot.

Meanwhile sales to foreigners over the summer amounted to R402 million (34 units), more than double the R197 million (26 sales) of the previous summer.

Almost across the board, we have seen the market fundamentals shift into positive territory, says Slot. Demand, sales and prices are up while the days on the market and stock levels are down.

Properties now comfortably sell within anything from a week to three months on average and buyers are paying ever higher prices. The tight inventory levels have also seen the number of show days down by almost a quarter, from 189 last year February to 146.

The demand is such that everybody wants to live and holiday here and there is just so much land and property to go around, says Slot. Hence, values just keep going up and up despite the fact that we are effectively still in a depressed economy.

With some of the most desired property located on this relatively small strip of land that hugs the coastline between mountain and sea - stretching from Camps Bay, just voted the best beach on the continent, past Bantry Bay, Fresnaye and Clifton to the V&A Waterfront - the area is unparalleled in the country.

Whether it is as a home away from home or permanent residence, there seems to be no stopping the market here, says Slot. The lifestyle is iconic and so are the views. Of course those who can’t afford to live here still get to enjoy the beautiful beaches and other facilities and over the summer, the area was again packed with locals and foreigners alike.

While we are concerned about the impact that the raising of transfer duty on sales upwards of R2.25 million might have, we expect it to be short lived and for the market to absorb this. With a cruise terminal on the cards for the Waterfront area and serious talk about a grand prix circuit for Cape Town, we doubt whether top end buyers will be deterred for too long. The area simply has too much going for it and, concludes Slot, buyers are likely to continue investing in this premier real estate belt that has stood the test of time better than any other residential area in the country.

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