Commercial development spawns residential growth in Umhlanga

Apart from contributing to local economic growth, commercial development in Umhlanga on the KwaZulu-Natal North Coast has fostered the ongoing development of new residential and mixed-use projects in the area, says Pam Golding Properties area principal, Gareth Bailey.

Says Bailey: “Accessibly located just north of Umhlanga, King Shaka International Airport opened its runway in 2010, catalysing demand for our coastal property market – both from a residential and commercial perspective. In recent years we’ve seen the expansion of Umhlanga Ridge and other new commercial and business developments in the surrounds which have had a major positive impact on the demand for apartment living.

“In addition to a high demand for residential units among locals and leisure buyers, there is the added convenience for inland purchasers, investors and upcountry commuters of owning a property at the coast, given that many regional business headquarters are on our doorstep. At present our estimate is that in the vicinity of Gateway Shopping Mall, local buyers comprise approximately 70% of purchasers, with more of an even mix of locals versus upcountry buyers on the sought-after beachfront.”

“However,” says Bailey, “we have seen consistency over time, with 50% of owners having stayed in their primary residences for 11 years or more. Quite likely influenced by Covid, when many reconsidered their priorities, we are seeing more people seeking to move to the coast for a better quality of life. Certainly, with the introduction of Airbnb and maturing service providers in this space, we have noticed an increase, albeit modest, in buyers purchasing leisure apartments.”

Reflecting on development in Umhlanga over decades, Bailey says although it now feels like an eternal feature, Gateway opened its doors in 2001 in the days when only lush green sugar cane occupied the land in front of the shopping centre, spanning the area from Umhlanga Rocks Drive down to the M4 in the east with Umhlanga Manors to the north and the M41 to the south.

Says Bailey: “In those days, and around Gateway, there existed only a smattering of commercial buildings including the Crescent Shopping Centre. There were no residential developments except for Horizon Views which still overlooks the traffic circle adjacent to the Sharks Board. And while the area between Gateway and the N2 had been mostly cleared for development, the land between Gateway and Prestondale and everything west of the N2 was also still under sugar cane.

“Around this time, the Umhlanga Rocks Hotel, a well-known landmark in the area, was demolished to make way for The Pearls development. The iconic Oysters complex (Pearls, Quays, Rock and Schelles) was developed from 2004. The old Oyster Box Hotel was renovated in 2009, which was the same year that construction commenced at Beacon Rock and Ridgeside Office Park.

In 2011, One on Herrwood commenced construction and the Oceans development, featuring the 5-star Radisson Blu Hotel, began construction in 2016 on the old Post Office and Umhlanga Country Club site. Many other residential and commercial buildings like Umhlanga Arch (2017) have since sprung up mainly around the greenfield areas of Gateway and the Umhlanga Ridge and Ridgeside precincts.

Reviewing residential developments over the years from a return on investment perspective, Bailey notes that in 2008 two-bedroom apartments in The Pearls sold for about R1 million, while today they will sell for over R4 million, and three-bedroom apartments which fetched around R1.5 million can now be acquired for over R8.5 million.

“Similarly, in One on Herrwood, one-bedroom units which sold for R500 000 in 2012 will sell for over R1.5 million today, while two-bedroom apartments that sold then for R750 000 will go for R2.5 million. Currently, frontline apartments on the Promenade in Umhlanga sell for approximately R50 000 per square metre.”

Sound advice from Bailey for buy-to-let investors is that rental yield is stronger with smaller units than with larger units. “Therefore, investors are advised to acquire more smaller units than fewer larger units if they wish to maximise income return. For example, we have seen an investor in the Oceans Raddison Blue Hotel Residences – the privately owned apartments above the hotel – acquire as many as four apartments.

“However, some investors buy to let with the intention of relocating from Gauteng and retiring in the unit when they are ready. In this instance, they need to balance their ultimate need for space with their priority of generating income yield in the interleading years. We also have investors who are interested in generating Airbnb income when they are not using the apartment themselves, but enjoy the flexibility of staying in the apartment when they are in town.

“In this regard, a brand new development, York Sanctuary Private Estate overlooking a greenbelt in uMhlanga Ridgeside and with ocean views, is an ideal proposition for a permanent residence or leisure getaway with Airbnb potential. The greenbelt provides wildlife and recreational activities such as trail running and fishing, right from your doorstep, while the Estate includes a luxurious clubhouse, gym, swimming pool with sweeping sea views, cycling/walking/running paths, sauna, fishing jetty, children’s outdoor play area and a community greenhouse. The one, two and three-bedroom apartments, which are priced from R1.9 million, R2.6 million and R3 million respectively, enjoy an abundance of natural light with floor-to-ceiling glass, while on-grade parking affords the convenience of parking on the same level as your apartment.”

Concludes Bailey: “One thing is apparent – by its very nature, frontline beachfront property is limited with little opportunity for new development, so it makes for potential sound residential investment.”