Excellent returns on City Bowl property

Cape Town’s City Bowl – incorporating suburbs such as Gardens, Higgovale, Tamboerskloof, Oranjezicht, Devil’s Peak and Schotschekloof/Bo-Kaap – has long been sought after for its cosmopolitan lifestyle, convenient central location close to schools, workplaces and entertainment amenities, as well as its scenic views of Table Bay. But it is also showing excellent return on investment in residential property, for owners of both free-standing homes and sectional title apartments.

This Edwardian home in Oranjezicht is on the market exclusively through Pam Golding Properties, priced at R15.9 million. The lavishly-appointed home offers six bedrooms and six reception rooms, with original woodwork, antique fireplaces and ornate ceiling. The property also offer top security and multiple garaging.
Pam Golding Properties’ area manager for the City Bowl and Atlantic Seaboard, Basil Moraitis, says there has been huge renewed interest in the area since the beginning of 2008, with more than 3700 properties sold during the six year period from 2008 to 2013, at a total value of over R8.7 billion. “The market for top-end homes in particular has shown substantial growth,” he says, “with an increase of over 1000 percent in both volume and rand value, during this period. In 2008, just two properties fetched over R10 million, to a total value of R21.5 million, while in 2013, that figure escalated to 21 homes sold in this price category, to a total value of over R330 million. And the demand for top-end homes has continued unabated into 2014, with another five homes sold in this price category in the first quarter of the year.”

Properties in this luxury segment, priced from R10 million upwards, have seen particularly notable price appreciation in the six year period under review (2008-2013). The average nominal return on investment for houses in this price segment was 20 percent per annum, with Oranjezicht being the top performing suburb at an average 23 percent, followed by Higgovale at 21 percent, and both Gardens and Tamboerskloof at 15 percent.
“Properties in the upper end of these suburbs tend to command the highest prices,” says Moraitis, “with roads such as Upper Orange Road, Leeuwenhof Road, Higgo Road and Glen Crescent affording sweeping views from their prime, elevated locations.”
Whilst the luxury segment may have been the top performing price bracket, properties in lower price ranges nevertheless showed strong returns as well. The average nominal return on investment for this period, for homes priced under R10 million, was 13 percent per annum. Top performing suburbs in this market category were Devil’s Peak (20 percent), Higgovale (15 percent) and Vredehoek (14 percent).
For example, Moraitis says, a home in Glen Avenue, Higgovale which was purchased for R6.5 million in January 2011, was sold in May 2013 for R16 million – a return on investment of 48 percent in little over two years. Similarly, a home in Glen Avenue, Gardens, which was acquired in September 2007 for R8.5 million, was sold in December 2011 for R26.5 million – a return on investment of 32 percent over four years. Pam Golding Properties has also seen a number of homes bought below R5 million in the past few years, being sold for R7 million or R8 million in the current market, showing annual returns of between 11 and 15 percent.
“Whilst it is certainly possible that some of these buyers purchased an older home, renovated it at some expense and then sold it on at a substantially higher price,” says Moraitis, “it nevertheless underlines the investment potential of the City Bowl, which is underpinned by the unflagging demand for its exceptional lifestyle. Last year (2013) saw close to 70 houses sold in Gardens alone, with another 60 in Vredehoek, and 50 in Oranjezicht.

It is not only the market for free-standing homes that has performed exceptionally well – the apartment market is also strong, with sales up from a total value of R397 million in 2008 to R754 million in 2013 – an increase of 90 percent in value, while unit figures climbed 56 percent from 315 units sold in 2008, to 491 in 2013.
Moraitis notes that the most attractive areas for apartments have always been Gardens, Vredehoek, Tamboerskloof and Oranjezicht, due to the high number of sectional title buildings in these areas. The top selling areas during 2013 were:

·         Gardens – 210 sales totalling R320 million

·         Vredehoek – 171 sales totalling R254 million

·         Oranjezicht – 95 sales totalling R131 million

·         Tamboerskloof – 81 sales totalling R137 million

“The average capital return on investment for apartments in the City Bowl varies from 11 percent to 14 percent per annum,” says Moraitis, “but on average an investor can conservatively look at a nominal return of 11 percent per year.”
Pam Golding Properties has a wide variety of homes on offer in the City Bowl at present, from apartments priced just over R1 million to gracious historic homes on the market above R15 million. 

(Stats sourced from Propstats and Lightstone)

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