A good time for suburban home-owners to subdivide

If you own a large property in a desirable older suburb, now would be a good time to subdivide and sell part of it, says Richard Gray, CEO of Harcourts Real Estate.

Factors in favour of such sales, he notes, are the renewed popularity of established suburbs that offer a wide range of amenities in close proximity to one’s home, especially among “millennial” buyers in their late 20s or early 30s.

“These buyers do also tend to prefer modern homes, but they are increasingly moving away from gated estates and security complexes on the margins of cities and looking for smaller stands in older, more central suburbs where they can build their own smaller, more energy-efficient homes in manageable gardens, avoid long commutes and enjoy having a variety of shops, good schools and recreation facilities on their doorstep. 

“In fact, we would say that the owners of empty or sub-divisible stands in the most sought-after areas are in the pound seats right now, as land prices in these areas are already well ahead of where they were five or 10 years ago, demand is high and most local authorities are keen on the densification of older suburbs.”

Gray says areas currently favoured by millennial buyers include:

*Douglasdale close to Sandton, where stands of between 400 and 500sqm are available at prices between R450 000 and R650 000;

*The Northcliff area (R600 000 for 450sqm);

*Muizenberg in Cape Town (R300 000 for 300sqm);

*Parklands (R500 000 for 350sqm); and

*The Bluff suburbs in Durban (from R700 000 for 700sqm)

Among more mature buyers keen to design and build their own homes, the most popular choices include suburbs such as:

*Morningside close to Sandton, where stands are priced at around R1m per 1000sqm, but most are larger;

*Hyde Park (R1,75m for just under 500sqm);

*Bedfordview (R1,1m for 1000sqm with a view);

*Constantia in Cape Town (R4m for 1200sqm);

*Bloubergstrand (R3m for 500sqm); and

*Durban North (R2,5m for 1300sqm).

“Of course sub-division can bring the sellers the additional advantages of increased security, lower maintenance costs and relief from rising property taxes,” he says, “but they do need to think about who will be paying the costs of subdivision and the installation of services on the new stand before they go this route.

“And our advice is usually for the seller to go through the process, carry these costs upfront and then to sell the subdivision at a ‘build-ready’ price. Otherwise, the sale is likely to be made conditional on the buyer obtaining the right to subdivide – and possibly to rezone - the property which means it will probably take a long time to complete and could fall through altogether.”

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