Big hole in Kimberley’s rental market

KIMBERLEY (July 31) - Affordability rather than location is dictating where first-time home buyers and investors purchase residential properties in Kimberly, on the back of five years of dramatic house price growth.

So says Connie Thornhill of Alex Thornhill Properties, a member of NRN Team International Homes and one of the Diamond city’s oldest real estate agencies.

Commenting on current market trends, Thornhill, who is also a director of the Northern Cape Institute of Estate Agents, says rising commercial activity in Kimberly has been partly responsible for the escalation in entry-level house prices, which she puts at around R500 000. The city’s growing economy has also pushed up prices at the top end of the market, where it is no longer uncommon to find homes with price tags of R3 million and more.

Kimberly’s rapid transition into a major commercial hub in the province in recent years has also seen demand for business premises escalate. This has impacted on former residential suburbs and stock levels since homes are now rapidly being converted into offices as demand for rental space outstrips supply.

Among the key economic drivers of the city are an upswing in tourist volumes, a R50 million project by mining conglomerate De Beer’s to upgrade the “Big Hole” as a tourist attraction, along with the construction of a R44 million Protea Hotel adjacent to it, and a R64 million expansion of the Diamond Pavilion Shopping Complex.

Some of the city’s valued land is also being utilised to build a R662 million medium security facility, all of which have undermined the city’s stocks of vacant land.

“In sought-after areas particularly, there are simply no vacant stands for development available any longer,” says Thornhill. As a result, former “grey areas” are no longer being shunned but are growing in status and popularity by those with limited spending power.

Referring to the cost of entering the local property market today, Thornhill says buyers with R500 000 to spend will qualify for a small, old-style home with wooden floors and pressed ceilings on a stand of up to 1000 sqm. These homes, which generally require renovation, tend to be found in suburbs such as Kimberley North, De Beers and West End.

Those with higher affordability tend to head for the Memorial Road area, and in particular the streets of Carrington Way and Milner Street, which are within walking distance of the private and popular Christian Brothers College.

To purchase an immaculate, original Victorian house on a stand of around 2 000 sqm buyers can expect to pay around R3 million. “These prices were unheard of a few years ago, but are now well within reach - and being paid - by executives from the diamond and other industries.”

While top-end stock is relatively easy to come by, Thornhill says Kimberly is in serious need of sectional title developments and flats, owing to the suppressed affordability levels of first-time, middle market and investor buyers.

“Property in Kimberly is a superb investment but investors must realise their bond repayments are unlikely to be covered by rental incomes owing to ongoing property price growth which has outstripped the rental market. They are unlikely more than R3 000 a month for a two bedroom flat, which will probably cost them about R300 000 today,” she says.

Capitalising on the huge demand for residential rentals, Kimberly has seen a rapid increase in the number of home owners turning their garages and other outbuildings into bachelor pads. The rentals they are receiving are being used in many instances to supplement their bond repayments. Most of these tenants tend to be single people unable to afford to buy their own homes.
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