City Bowl - Property proves valuable investment

While some property owners have had to settle for lower prices since the financial crisis, this isn’t the case for those lucky enough to own property in the City Bowl, where prices have increased from 20% to 50% over the last five years.

2 Bedroom Apartment for sale in City Bowl, Cape Town

 “Propstats records from 2009 to 2013 show some astonishing price increases, particularly in the freehold market,” says recently appointed Manager at Jawitz Properties City Bowl, Trudi van Wyk.

The average selling price for freehold property in Orangezicht has increased from a little over R4.1 million in 2009 to a little over R6.3 million in 2013. In the same comparison, Tamboerskloof rose from R3.8 million to a little over R5 million, while Gardens increased from R2.3 million to R3.2 million, and in Higgovale the average went up astoundingly from R4.8 million to R9.7 million. Vredehoek meanwhile went from a little over R2.7 million to R3.6 million and the CBD saw an increase from R1.6 million to R3.1 million.

 “These days it is very hard to find a free-standing home for under R3 million,” says van Wyk.

Looking at sectional title figures over the last five years, Tamboerskloof’s average sale prices have increased from a little over R1.4 million in 2009 to R1.8 million in 2013. For the same period, Devil’s Peak  increased from R1.1 million to just under R1.7 million, Higgovale has gone up from R3.3 million to just under R4 million, and Vredehoek has also gone up from a little over R1.2 million to R1.4 million.

While sectional title units haven’t enjoyed quite the same price increases as freehold properties, owners have benefitted from the increase in rentals. “Rental yields and returns on investments have increased from 5% in 2009 to 8-9% in 2013. To quantify this, a R2 million property in 2009 could have been rented out for R8000 per month, but could now be rented out for R12 000 per month,” van Wyk says.

Apartment for sale in City Bowl, Cape Town

“The obvious reason for this is increased demand, coupled with tight supply.”

In addition to the numbers, van Wyk and her team have looked at the various areas comprising the City Bowl, speaking to residents and assessing current and long-standing trends that influence supply and demand.

On the demand side, City Bowl has and will always be appealing for its central location, many amenities and beauty. “Nestling in the foothills of Table Mountain, with ocean views and plenty to do, many people will always be drawn to being able to call the City Bowl ‘home’,” van Wyk says.

On the supply side, the increases in rental yields have encouraged owners to hang onto their properties.  Then there is the fact that in the older, more established areas such as Higgovale, Gardens, Tamboerskloof and Orangezicht, people tend to stay in their properties for up to 40, or even 60 years.

In Cape Town generally, the trend is to live in a home for five to seven years, and then sell it. “But not so in the City Bowl, except for more entry-level areas  such as lower Gardens, Vredehoek and Devil’s Peak,” van Wyk adds.

On the rental side, parents who are hoping to place their children in apartments while they study in Cape Town are really struggling to find available properties. “Because rentals are so high and few and far between, many parents have opted to buy.  This way they can have their child staying in one room, while renting out the other room to another student to help with the bond,” van Wyk concludes.

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