Diamonds maybe forever, but property also holds its own

While probably best known for originally being the diamond capital of the world - and home to the 'Big Hole', the city of Kimberley in the Northern Cape is enjoying increasing economic growth and is today a vibrant and rapidly expanding city, according to Salvadore Buonadonna, area principal for Pam Golding Properties.

"The Northern Cape in general is buoyed by the strength of mining and agriculture and to a lesser extent, tourism, with benefits for all sectors of our regional economy," he says.

Well situated in the centre of South Africa and accessed by two national roads bringing increasing tourism, Kimberley, although remaining heavily mining dependant, has a local economy which is increasingly diversifying with:

* construction of the new Kimberley Mall on the south side of the city about to commence - with major retailers as anchor tenants,

* the R64 million expansion of The Diamond Pavilion to create 4 881sqm in additional retail space, shopping and parking facilities

* a new business complex to open on the Cape Town road

* a new cement plant planned for Postmasburg

* and expansion of output by Mittal Steel at their Sishen iron ore mine - all of which have positive spin-offs for the local property market.

"However among the key economic drivers of the city is a definite upswing in tourist volumes with positive news of 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," says Buonadonna.

In addition to the 'Big Hole' Kimberley is also well known for its museums, including the Kimberley Mine Museum and McGregor Museums, tours of the Bultfontein Mine, majestic Victorian buildings and even the popular Kimberley Ghost Trail.

In terms of the residential property market in Kimberley, Neumann says the highest activity is below the R500 000 mark despite the recent interest rate increases, with solid demand and steady sales volumes in the price range up to R850 000 and with the demand for homes to rent increasing by over 15 percent over last year.

"Capitalising on the burgeoning demand for residential rentals, Kimberley has seen a rapid increase in the number of home owners turning their garages and other outbuildings into bachelor pads which are snapped up by tenants who cannot afford to purchase their own homes. In this way these new landlords are able to utilise the additional income to supplement their bond repayments," says Buonadonna.

"New homes are also being injected into the market with new residential developments in Hillcrest, Minerva Gardens and Royaldene. However, in the popular areas in particular there are simply no vacant stands available for development resulting in pent-up demand for sectional title developments and apartments.

"There is a general shortage of supply of affordable homes, particularly when one considers the influx of people as a result of the new hospital and R662 million medium security, correctional service facility due to open later this year. This is coupled with a growing demand among black buyers entering the market," he says.

In the wake of five years of dramatic house price growth, affordability rather than location is dictating where first time home buyers and investors purchase residential properties in Kimberley. As a result, former 'grey' areas are no longer being shunned but are growing in status and popularity among those with limited spending power.

Buonadonna adds that rising commercial activity has contributed to the escalation in entry-level house prices, which he currently estimates at around R500 000. For this price buyers qualify for a small, old-style home with wooden floors and attractive pressed ceilings situated on a 1 000 sqm stand. Homes such as these, which generally require renovation, tend to be found in suburbs such as Kimberley North, De Beers and West End.

The diamond city's growing economy has also boosted 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.

Kimberley's rapid transition into a major commercial hub in the province has also seen demand for business premises escalate, a factor which has further impacted on former residential suburbs and stock levels as homes are now rapidly being converted into offices as demand for rental space outstrips supply.
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