Students and investors drive demand for Southern suburbs sectional title apartments

The Southern Suburbs of Cape Town are synonymous with family homes, top schools and international sporting and medical facilities. 

Yet large houses on substantial grounds are not the only property offering – and Pam Golding Properties (PGP) reports that the variety of sectional title accommodation in the area is highly sought-after by a number of different buyer categories.

PGP’s area manager for the Southern Suburbs, Howard Markham, says the presence of the University of Cape Town (UCT) and associated institutions such as Groote Schuur Hospital, ensure that there is constant demand for student accommodation in this area.  “Parents buying for student children are one of the biggest categories of buyers,” he says, “as well as buy-to-let investors wishing to capitalise on the student rental market. We also see a number of buyers who are on a somewhat limited budget, but still want to get a foot in the door in a good area – for example young married couples might opt to buy an apartment in Rondebosch, with a long term view to raising a family in the suburb at a later stage.”

Pam Golding Properties has the exclusive mandate to market a luxurious three-bedroomed penthouse in “one six one” – an upmarket building in Rondebosch.  The 265sqm unit includes a large covered balcony with lovely mountain views, as well as two under-cover parking bays.  The building has 24 hour security and a communal swimming pool. The apartment is priced at R4.3 million. 

“And then there are those on a larger budget,” Markham continues, “who simply prefer the convenience and security of living in a sectional title building, where they can enjoy all the benefits of the Southern Suburbs lifestyle, but where maintenance is someone else’s problem. The sectional title market offers all of these categories of buyers the option of an affordable, sound investment in a good area which never goes out of fashion, and enjoys perennial demand.”

PGP currently has 14 agents servicing sectional title in the Southern Suburbs, selling in all areas from Woodstock to Lakeside.  Prices can vary quite substantially from one suburb to another, but in general, the entry-level price for the sectional title market is around R650 000 for a bachelor flat, going up to a ceiling of around R4.5 million for an upmarket penthouse or duplex. A one-bedroomed apartment can be purchased around the R1 million mark in Kenilworth, Rondebosch or Claremont, while a two-bedroomed unit can fetch the same price in areas like Mowbray, Rosebank or Wynberg.  The age of the apartment buildings, security features and communal facilities also impact on price, with newer lifestyle developments such as The Quadrant in Claremont fetching higher prices due to the presence of on-site gyms, swimming pools, coffee shops and more.

Markham says the highest demand tends to be in the price range from R1 million to R2.2 million, with a particular call for two-bedroomed apartments. “In Rondebosch, for example, most of our sectional title sales are to parents based in Gauteng and Durban, who are buying for their student children,” he says. “They tend to prefer a two-bedroomed unit which two students can share – not only does this decrease their living expenses, but it also offers good security, which is a significant factor for most parents. Another key concern is the availability of secure parking, or easy access to public transport and shuttle services such as UCT’s ‘Jammie Shuttle’.”

Markham says for investors, the potential for rental return in the Southern Suburbs is significant, and ongoing, thanks to a new crop of students entering the market every single year. A one-bedroomed apartment in one of the newer lifestyle developments can fetch rentals of around R5500 to R6500 per month, with two-bedroomed units being let for between R10 000 and R12 000 per month.  Older buildings are more affordably priced, but even so, a two-bedroomed unit can fetch rentals of R5000 to R7500 per month, he says.

Markham points out that like all South African universities, UCT has a limited offering of on-campus accommodation for students. “In January this year (2013), the executive director of student affairs noted that they could accommodate a total of 6577 students in campus residences – yet they had received more than 24 000 applications for accommodation. While plans are afoot to invest in new residences, the reality is that many of these students have no option but to look for rentals in the surrounding suburbs – and this market isn’t going to diminish any time soon.”

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  • Adriaan Grove - posted 17 Sep 2013 03:20 PM                                    

    sounds like a great long term investment option.

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