Housing market in Cape Town Metropole continues to shine

Having  largely retained its lustre throughout the recession and ensuing property market recovery, the Western Cape’s Cape Town Metropole has been identified by a recent global wealth report as among the top 20 best performing housing markets and offering a top value proposition for luxury property investment.

This luxury home in Bishopscourt was recently sold by Pam Golding Properties for R28 million.

Earlier this year the Mother City was named as a global favourite by Conde Nast Traveller’s annual readers’ choice awards, leaping from 11th place last year to 4th ranking in 2015 and considered the ‘best city in the world for blending urban culture with the great outdoors’. More recently, Conde Nast Traveller has named Cape Town the 3rd best food city in the world just behind San Sebastian in Spain and Paris.

Over the last two decades the world-acclaimed Atlantic Seaboard has rightfully claimed its place as one of the most sought after destinations on this planet, rivalling the likes of other seaside destinations such as Miami, San Francisco and Sydney, and rapidly becoming Africa’s very own alternative to St Tropez, says Dr Andrew Golding, chief executive of the Pam Golding Property group. “Coupled with this, transformation of the central city into a vibrant mixed-use area with a thriving residential component has imbued the city with heart and soul, as well as offering a trendy, modern lifestyle on a par with other major world-class cities and setting Cape Town apart from many other inner cities around the rest of the country.

“The fact that an ever-increasing number of home buyers in Cape Town are those relocating from Gauteng – and other provinces, bears testament to the high desirability not only of the location but also of living in a well-managed city,” he says.

“The confidence in the real estate market that returned some 20 months ago has escalated during Pam Golding Properties’ (PGP) past financial year from March 2014 to February 2015 inclusive, and is particularly evident in this region of the Western Cape,” says Laurie Wener, MD of Pam Golding Properties in the Cape Town Metro Region.  Consistent high demand and persistent low supply of homes has sustained capital growth across all markets. Apart from robust activity, high calibre buyers and ‘clean’ offers – without suspensive conditions, were the hallmark of our property transactions. A noteworthy trend, which is ongoing, saw multiple buyers frequently competing for the same property and with back-up offers becoming increasingly prevalent. This was driven by a number of factors, including improvement in buyer sentiment, the resurgence of investor activity diverting monies from stock markets into property acquisitions, and the popularity of locations with convenient access to good schools and tertiary educational institutions in the Cape exerting pressure on the supply of stock – thereby pushing prices up.”

Wener says over and above this, the high demand from buyers outside the Cape – mainly from Gauteng and KwaZulu-Natal, further swelled market demand and accounted for 13 percent of PGP’s total sales in the Cape Town Metro area. “In addition, international buyers returned to our shores and spread over the entire region, with the focus being on the Atlantic Seaboard, and specifically Camps Bay, with the result that these buyers accounted for 10.6 percent of our sales turnover in the Cape Town Metropole during the year under review.

This stylish home in Upper Fresnaye on the Western Cape Atlantic Seaboard has been sold by Pam Golding Properties for R28.5 million. With six bedrooms, this elegant home of grand proportions is set on 1942sqm at the very top of one of the area’s most exclusive avenues. Newly built and designed for lavish entertainment and relaxed family living, generous living spaces flow onto expansive terraces, a level garden and swimming pool – all with breathtaking views over the city towards Robben Island and Table Bay. It includes a separate entertainment level with state of the art movie theatre, playroom, bar area and two additional guest suites, executive study, gourmet kitchen, double staff suite, multiple garaging and parking.

“While the financial institutions remained in conservative mode with respect to value, and loan to value ratios, with over 60 percent of our sales comprising cash buyers, this did not impact negatively on transactions in established, recession-resistant areas.”

Prices also reached an all-time high over this period with luxury apartments in Clifton and the V&A Waterfront achieving averages of R80 000 and R100 000 per square metre and from R40 000 per square metre in the surrounding suburbs.

The hottest spots were the Atlantic Seaboard, where PGP recorded R1.67 billion in sales for the year – with one of its Camp Bay agents, Barbara Rogers, writing sales of over R70 million in the month of February alone. Says Wener: “During the year, five residential property sales were recorded on the Atlantic Seaboard for prices in excess of R50 million each. Our Southern Suburbs operation performed remarkably, concluding a top price of R69 million achieved for a top-end home in Bishopscourt.  Residential property prices rose rapidly in Southern Suburbs areas convenient to premier schools as multiple buyers competed for limited stock and some sellers even withdrew properties from the market for fear of being unable to replace them.”

Other luxury property transactions concluded by PGP were 12 sales above R20 million each and 40 sales for homes which achieved prices between R10 million and R20 million. The flurry of sales extended to the South Peninsula, where PGP office had an excellent year, chalking up a number of notable sales. These include a property in St James which fetched R15 million – the highest price paid for a property in this coastal area, a property which sold for R8.9 million in Upper Quarterdeck Road in Kalk Bay, an plot of vacant land - zoned single residential and situated in Links Crescent in Simonstown which was purchased for R5.75 million, and a house on the golf estate in Clovelly which sold for R5.25 million.

Wener says this high activity spread up the Western Seaboard through Blaauwberg and Langebaan to Velddrif. Here the abundance of stock over previous years rapidly diminished with increased demand from young families seeking good value, proximity to schools and modern infrastructure in Blaauwberg as well as holiday homes up the West Coast, where the developing infrastructure and value for money is beginning to attract permanent residents.

“The long term rental market was no less hectic with increases in lease value turnover versus the previous 12-month period ranging from 15 percent in Southern Suburbs to 63 percent on the West Coast. PGP’s top 21 leases on the Atlantic Seaboard and in Southern Suburbs ranged from R45 000 to R104 000 per month,” says Wener.

According to Lightstone Deeds Office figures available for the period from 1 July 2013 to 30 June 2014, PGP sold 46.8 percent of properties in the R12 million and above price bracket, 30.7 percent of properties in the R6 million to R12 million price band, and achieved 18.4 percent of sales in the naturally more fragmented R3 million to R6 million bracket.

She says further trends evident in the Cape Town Metropole reflected a substantial demand from October through to February for quality student accommodation both to purchase and to rent in Southern Suburbs and the city, with many parents viewing these acquisitions with the dual purpose of accommodation for their children and an investment opportunity. These represented a mix of buyers and tenants from the Western Cape, Gauteng, KwaZulu-Natal and many African countries.

“Developer activity has returned with increased demand and limited opportunities driving up costs, which has resulted in prices of new residential development products being higher than that of existing stock, in order to achieve feasibility. The benefits for investors are apparent as new benchmarks are being set, with value and capital growth potential perceived along with all the advantages of modern design and conveniences. The success of the Amalfi and The Vantage developments in Mouille Point are typical examples, along with Belvedere Court and 44 on Palmyra in Claremont, all of which were sold exclusively by Pam Golding Properties.

“Currently, there appears to be a sustained level of activity at all levels in the market, despite the lacklustre economy, energy deficit and political issues. While there is no crystal ball, it may be that the increases in the costs of utilities, fuel and the ongoing requirement for security – together with the modern trend for convenience - will raise the demand for properties on smaller erven, in gated communities and apartments. The shortage of available places in schools in the Southern Suburbs and on the Atlantic Seaboard is bound to remain a limiting factor, while the high level of cash sales in the Cape and its relative recession resistance-facilitating mortgage acquisition ensures adequate financial qualification.”

Concludes Wener: “We also anticipate that the change in the transfer duty tariff will be an incentive to the more cost-sensitive market in the price range below R2.65 million, and although higher priced buyers will be paying more, it is unlikely to have a sustained negative effect on sales in the upper price brackets.”

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