Franschhoek offers excellent development opportunities

Picturesque Franschhoek offers opportunities for developers.

There are many opportunities now await enterprising residential property developers in Franschhoek, according to Johan Hugo, the Rawson Property Group’s franchisee for Stellenbosch and Franschhoek.

“To be a successful developer in Franschhoek you must understand that the Stellenbosch/Franschhoek Municipality is determined to limit the widening of its built environment as much as possible. In particular, encroaching on surrounding agricultural land is just not on the agenda.

“The municipality is, however, prepared to approve densification in the built areas and, if possible, wants more duplex and apartment projects, provided these conform to the strict architectural guidelines that apply here. In Franschhoek, in particular, these have played a very significant role in preserving the town’s character and general appeal.”

The second point to be grasped, says Hugo, is that since the low point in 2010 Franschhoek has been flourishing. The average price of freehold units in 2010 is recorded by Lightstone as being R1.735 million, but the average price has now reached R3.645m, giving an annual increase in the region of 16 percent. The performance on sectional title units has been very similar.

“As in all thriving economies, the good conditions have resulted in a steady influx of employees to the town. They come to serve the shops, banks, restaurants, pubs, delicatessens, home maintenance and other service industries and, of course, the municipality itself, which is a large employer. Most of the people working in Franschhoek have to commute because they cannot be accommodated in the town, because there are not enough homes in the R2m to R3.5m price range. Properties available at present tend to be more expensive.”

Hugo says Franschhoek now needs new duplex units priced from R2m to R3.5m and apartments priced from R900 000 to R1.6m.

“To achieve this may well mean replacing certain older houses with little architectural merit, with high density units. It can be accepted at the outset, that sites will not be handed to the developers on a silver platter and that conforming to the municipality’s architectural wishes may be difficult. However, I believe that if units of the kind described are produced they will prove to be good investments because rents in Franschhoek are high and the capital appreciation on the investment of residential property here is impressive.

“The general perception that Franschhoek is a no-go area for developers is not accurate,” says Hugo. “There are huge opportunities for developers here.”

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