Sustained improvement in residential property market conditions

The residential property market in the Cape Town metropolitan area is seeing a sustained improvement in sales activity – this despite the cold, wet winter season being traditionally the quietest time of the year for property sales in this area. 

Pam Golding Properties (PGP) reports that the sought-after Atlantic Seaboard has spearheaded the upturn in market activity and capital growth, even in top-level price brackets.  And this improvement in activity is inevitably beginning to spread to other areas of the city, says PGP’s MD for the region, Laurie Wener, who notes that most of the company’s offices are beginning to see an upturn in sales figures, with the Atlantic Seaboard leading the way. PGP’s sales for the Cape metro area in July 2013 were 57 percent ahead of the same month last year (2012).  The financial year-to-date sales figures (1 March to 31 July 2013) are also 44 percent ahead of the same period in 2012.

Notable areas

Among the best-performing areas have been the Southern Suburbs, with the suburbs of Rondebosch and Newlands in particular seeing strong sales activity. “At present we are seeing a shortage of stock coupled with strong demand for family homes,” says Wener, “driven by the area’s reputation for excellent schools. Buyers are prepared to pay up to R8 million, and sometimes even more, to secure a sizable family home close to leading schools like Bishops, Rondebosch, Rustenburg and Westerford.”

The sectional title market is also enjoying a surge in popularity at present, most notably in the City Bowl and along the Atlantic Seaboard. Wener notes that this particular market has always enjoyed sustained demand and a degree of resilience to prevailing trends – but it is now noticeably moving into a growth phase.  “We are seeing buyers opting for the convenience and security of apartment living, with a resurgence of interest in three-bedroomed apartments, particularly from those wishing to scale down from larger houses to enjoy a more convenient and hassle-free lifestyle. Buyers are once again prepared to purchase in older buildings and then invest in renovations, knowing that they can add immensely to the value with the potential to achieve sound capital growth on re-sale.”

“The Cape Town Central City is also seeing a resurgence of interest,” she adds, “with our agents selling 20 apartments in this area in the first five months of the financial year (March to July 2013) alone. These included multiple units at the landmark Mandela Rhodes Place, as well as sales in other popular buildings such as Icon, Cartwright’s Corner and Mutual Heights. There is definitely a sense of renewed invigoration in efforts to make this a vibrant residential area.  Moves to pedestrianise part of Long Street, for example, are to be welcomed, and if coupled with excellent security and CCTV networks, could really enhance the experience of the inner city. It is exciting to see this rejuvenation process receiving a fresh burst of energy, coupled with buyer confidence.”

Investors and Developers

It’s not only residential purchasers who are showing renewed interest in sectional title buildings – so are investors.  Wener notes that buyers in the past few months have included several investors wishing to buy multiple units with an eye on rental return as well as capital growth. “This is a very positive sign of renewed confidence in the market,” she says.

Developers are also showing renewed interest in the market – particularly those launching relatively small residential projects with low unit numbers in the medium and top-end price categories (i.e. units costing from R1.5 million to R15 million). “Some of these are selling off-plan,” says Wener, “while in other instances developers are prepared to commence building before selling. This marks a significant shift in sentiment from the last few years, where we have seen limited developer activity, with most only prepared to start building once the projects are sold out. It is clear that developers are now sensing stronger demand for new, modern homes with a convenient design and lifestyle offering.”

International Buyers

“After a long spell of muted interest, international buyers have re-entered the market in significant numbers in the last six months (March to August 2013), most notably on the Atlantic Seaboard, but also in the Western Seaboard/Blaauwberg area and in some of the Southern Suburbs,” says Wener. “This activity has spanned all prices ranges from entry level apartments to ultra-top-end luxury properties.”

“One particularly interesting feature of these sales is that buyers are originating not only from our traditional overseas markets – such as the UK and continental Europe - but also increasingly from the rest of Africa, the Middle East and Far East. Our recent top-end sales have included buyers from Ghana, Angola, China, Nigeria and the UAE. These buyers are typically seeking luxurious properties with unobstructed ocean views and high levels of privacy, with access to the cosmopolitan lifestyle and favourable climate offered by the Atlantic Seaboard.”

In conclusion, Wener notes that financial institutions remains cautious but not averse to lending - reflecting the slow but steady improvement in the market.  “If conditions have improved to this degree through our quietest winter months, then we have every reason to be optimistic about continued and even escalated improvement in sales as we head into spring and then our peak summer selling season,” she says.

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