Margate property set to withstand market downturn thanks to ongoing tourism

Just 20 km south of Port Shepstone, and a scenic 135 km coastal drive from Durban, lies the popular seaside resort town of Margate.

Renowned for its laid back lifestyle and idyllic south coast beaches – with warm water swimming, scuba-diving, snorkelling and boating activities – this south coast gem has been a favourite holiday destination for local and overseas tourists for many years.

As a tourism-fuelled town, however, there have been fears for the future of the local property market now that South Africans are tightening their belts against increasing financial strain. Interestingly, local experts are not predicting Margate’s tourist economy to negatively affect property growth. In fact, the considerable rental sector could help see the town safely through the upcoming market downturn.

“Margate has always been fuelled by the tourism industry,” says Charl Cilliers, the Rawson Property Group’s franchisee for the area. “It’s particularly popular with local families as a more affordable alternative to the north coast, and that’s going to play into its favour as holiday budgets come under fire.”

Cilliers says that around 75 percent of Margate’s sectional title properties are let out as holiday accommodation, while 35 percent to 40 percent of freehold properties operate on a similar basis.

“We do expect to see a decrease in the average length of holiday rentals over the next period,” he says, “but numbers should remain high enough to keep those units reasonably full, especially if holiday-makers turn to Margate in preference of more expensive destinations.

“Confidence in Margate’s tourist appeal and property market potential appears to have spread to buyers in the area. Our general sales enquiries have increased noticeably over the last six to eight months,” says Cilliers, “and we’re seeing huge demand for rentable permanent accommodation as well as the usual holiday properties. For now, we have a good amount of stock on offer, so the opportunities are there for the taking. Prices are also stable, but will increase gradually over the next few years.”

Buyers can expect prices in Margate to range from R400 000 for one-bedroom apartments, to R6 million for a luxury penthouse.

“Our most popular price range at the moment is between R750 000 and R1.3m,” says Cilliers. “These properties tend to be ideal for rentable holiday accommodation, and often generate income sooner than more expensive investments.”

Margate has much more than just typical holiday apartments on offer, however, and Cilliers describes a mix of old and new freestanding homes, eco estates and even smallholdings in the area. Historically, a lot of buyers are either scaling down or investing in their second or third home, which is why sectional title properties are so popular – they’re easier to manage and to maintain.

“Local families living in the area permanently, however, tend to prefer freehold properties, and there is increasing demand for long-term rentals of this type, which is a great opportunity for buy-to-let investors.”

Cilliers advises buyers to do their research before investing in a particular Margate property. The purpose of the purchase dramatically affects the type of property to look for, he says.

“If you want a short-term holiday rental property to generate decent income, don’t look in a quiet neighbourhood far from the beach. Long-term rentals, on the other hand, could benefit from the peace and privacy of a less central location.”

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