Rapid growth in eMalahleni’s (Witbank) property market provides sound investor opportunities

Situated in Mpumalanga, in the heartland of South Africa’s coal mining industry, Witbank – now known as eMalahleni, now enjoys a far more diversified economy than previously, while the property market has never looked stronger, says Elisme Swart, Pam Golding Properties (PGP) area principal in Middelburg, Lydenburg and Dullstroom, who has also acquired the franchise rights for PGP in eMalahleni.

Comments Dr Andrew Golding, CE of the Pam Golding Property group: “Having proven effectively recession-proof, the burgeoning town of eMalahleni is poised to experience further rapid growth, providing good buying opportunities for those who acknowledge the medium to long term value of residential property as a sound asset class. We are delighted that Elisme Swart, a highly successful entrepreneur and existing PGP area principal in Mpumlanga, is enabling the incremental increase of our market share and exposure in the province.”

Approximately 35km from the large farming and industrial town of Middelburg (which is often referred to as the ‘stainless steel capital of South Africa’), eMalahleni, which was once dependent on coal, electricity and steel, is thriving. “Having doubled its population over the past decade as a result of business opportunities, job opportunities and economic stability, eMalahleni has grown into a world class international business destination as home to large organisations such as BHP Billiton, Anglo American, Exxaro, Eskom, Renova Group, SABMiller, Komatsu and Xstrata among others,” says Swart.

And eMalahleni seems set to experience another surge in the local economy as a result of several factors. These include the addition of a fifth power station in the area, stepped-up coal mining to feed the lucrative export markets via Richards Bay, other new mining investment by the likes of BHP Billiton, and the continuously increasing volume of goods being transported to and from South Africa via the Maputo Corridor, linking South Africa to Mozambique. Indications are that there is sufficient land for the property development that will no doubt follow, and farm lands surrounding the town are being bought up by investors and developers to accommodate the town’s development and expansion.

Swart say formerly, the mines and Eskom were the major drivers of the local property market, however, these quasi-government organisations have now divested themselves of their property holdings, transferring ownership to private individuals. In the process, they have fuelled a property boom in the area which has helped spur the economic transformation of eMalahleni as a whole. The diversification of the economy has similarly stimulated a broadening of the property base, which has opened the way for middle and upmarket property development and trading.

Well positioned en route for travellers from Gauteng province to Kruger National Park, eMalahleni is seeing an influx of retail development which is further evidence of the economic health of the town, being both a catalyst for and consequence of increased residential property growth. There has also been an increase in the number of commercial property developments, reflecting the ever increasing demand for commercial and industrial property. The latest of these include the N4 Business Park and the new BHP Billiton head office.

Says Swart: “To cater for the rapid growth of eMalahleni, new residential developments are springing up with some 500 to 600 units set to be constructed within the next 12 months, mainly in the price range from R560 000 to R1.6 million. The latest trend to emerge in the residential property market is residential estates such as the upmarket Bankenveld golf estate on the banks of the Witbank dam, where stands have been selling at an average of R550 000, and which has been so successful that a second estate is now being planned in the area.

“Low interest rates and relatively high rental rates, coupled with a shortage of rental units, are prompting first-time buyers to acquire their own homes and are targeting townhouses priced at around R500 000/R600 000. In addition, the demand for family homes in the R850 000 to R1.2 million price range is picking up. Homes priced below R1 million are particularly sought after and two and three bedroom units in Kwaguqa, Clewer and Witbank extensions are selling rapidly in the price bracket between R350 000 and R800 000. A high demand is seeing comfortable, family homes in the R750 000 to R1 million price range in short supply.”

Swart says that freestanding homes in popular areas such as Model Park, Del Judors, Reyno Ridge, Highveld Park and Die Heuwel sell from around the R1.2 million mark, typically to professionals. The demand for smallholdings is also steady as many buyers are seeking the best of both worlds by living out in the country but within a few minutes’ drive of all amenities in town. However, these are hard to come by and properties of two hectares are marketed from R2 million up to R10.8 million.

“With all the activity in the market and high demand, the current market certainly offers opportunities for owner-occupiers who realise that property represents a sound long-term investment. This includes a selection of undeveloped stands available for buyers wishing to build their own homes. Prices start at approximately R400 000 for fully serviced stands of 900-1080 square metres,” she says.

“The demand for residential rental units remains high as contractors and new employees at Eskom’s Kusile power station and the steel industries in and around town seek accommodation. However, investors in buy-to-let properties are currently sitting on the sidelines, which is causing a shortage of rental homes and resulting in an upsurge in sales. Rentals for bachelor flats start at around R3 800 per month, more upmarket one bedroom apartments achieve average rentals of R4 200, two bedroom apartments around R5 000 while rentals for two bedroom townhouses range between R5 000 and R8 000 a month, depending on location. Tenants include entrants to the labour force, young couples and retirees, as well as those upgrading or downsizing who rent while shopping around for good value before making a purchase decision.”

Swart says the high demand has pushed rentals up between six and eight percent in the past year, which creates sound long term investment opportunities for prospective landlords. Purchase prices of rental units in high demand currently start at around R400 000 for one bedroom apartments and from R620 00 upwards for two bedroom townhouses.

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