CAPE TOWN IS BOOM­ING

Where to tar­get growth ar­eas in the hous­ing mar­ket

Financial Mail - Investors Monthly - - Front Page -

The young Ger­man cou­ple that re­cently forked out a record R290m for a three-storey man­sion in Bantry Bay ini­tially wanted to buy a pied-a-terre on the Mediter­ranean is­land of Ibiza or France’s Saint-Tropez. It un­der­scores just how de­sir­able the Mother City has be­come as a global sec­ond-home hotspot.

UK-based prop­erty group Knight Frank’s Wealth Re­port 2016 con­firms Cape Town’s ris­ing al­lure among the su­per-rich and fa­mous, plac­ing it among the 15 most pop­u­lar sun- and snow-belt in­vest­ment des­ti­na­tions in the world. Ac­cord­ing to the re­port, Cape Town now at­tracts more high net-worth sec­ond-home in­vestors — those with as­sets ex­ceed­ing US$10m — than Cannes in the south of France.

More­over, Knight Frank’s lat­est house price fig­ures show that Cape Town is now the third-best per­form­ing res­i­den­tial prop­erty mar­ket in the world af­ter Van­cou­ver and Shanghai. Knight Frank’s Prime Global Cities In­dex, which tracks up­per-end house prices in 37 cities, shows that Cape Town recorded growth of a sub­stan­tial 16.1% for the year end­ing June. That is well ahead of the av­er­age 4.4% in­crease recorded by the in­dex as a whole over the same time (see graph).

Cape Town’s per­for­mance is in stark con­trast with the rest of SA. In most other ma­jor met­ros, house price growth slowed to the low sin­gle dig­its in the first half of 2016, no doubt fol­low­ing dis­mal eco­nomic growth prospects and ris­ing in­ter­est rates.

Cape Town’s stellar per­for­mance was driven by lim­ited sup­ply and a weak rand, says Kate Everett-Allen, who heads Knight Frank’s in­ter­na­tional res­i­den­tial re­search divi­sion. The re­port sug­gests that Cape Town may have lured wealthy buy­ers away from other tra­di­tional global hotspots due to de­fla­tion­ary concerns in the euro­zone, un­cer­tainty sur­round­ing the im­pact of the UK’s Brexit de­ci­sion and higher

The suc­cess of the DA-run lo­cal gov­ern­ment com­bined with grow­ing tourism num­bers have made Cape Town a sought-af­ter area to live in

prop­erty taxes and fees for for­eign buy­ers.

But it’s not only de­mand from well-heeled off­shore buy­ers that is prop­ping up house prices in the Mother City. In­dus­try play­ers say the trend among Gaut­eng res­i­dents mi­grat­ing to the West­ern Cape in search of a bet­ter-qual­ity life­style is also fu­elling de­mand and prices.

Pam Gold­ing Prop­erty (PGP) group CEO An­drew Gold­ing says in­creased de­mand from up­coun­try buy­ers, cou­pled with lim­ited sup­ply, has to some ex­tent in­su­lated the West­ern Cape from the house price fluc­tu­a­tions seen else­where in SA. “Cape Town’s coast­line and moun­tains act as a ma­jor con­straint on the city’s abil­ity to ex­pand, which goes some way to­wards ex­plain­ing the out­per­for­mance of its hous­ing mar­ket de­spite Jo­han­nes­burg’s eco­nomic dom­i­nance.”

Gold­ing says the “semi-gra­tion” trend has bol­stered not only the Cape Town hous­ing mar­ket but also that of nearby coastal towns and the Winelands area of Stel­len­bosch, Som­er­set West and Paarl.

Seeff chair­man Sa­muel Seeff says the suc­cess of the DA-run lo­cal gov­ern­ment com­bined with grow­ing tourism num­bers, both do­mes­ti­cally and in­ter­na­tion­ally, have made Cape Town and sur­rounds a sought-af­ter area to live and in­vest in. “Con­se­quently, lux­ury homes in key ar­eas on the At­lantic Seaboard such as Clifton and Camps Bay are now sell­ing for at least 40% more than their coun­ter­parts in Gaut­eng.” He says wealthy Jo­han­nes­burg buy­ers are pre­pared to pay this pre­mium be­cause of the cap­i­tal-preser­va­tion ben­e­fits of­fered by Cape Town.

Lat­est hous­ing data from prop­erty re­search group Light­stone con­firms that there has been a marked in­crease in Gaut­eng buy­ers in the West­ern Cape over the past four years. In fact, Light­stone an­a­lyt­ics di­rec­tor Paul-Roux de Kock says the num­ber of hous­ing trans­ac­tions con­cluded in the West­ern Cape by buy­ers tra­di­tion­ally from Gaut­eng last year sur­passed the lev­els reached at the height of the hous­ing boom in 2007.

For would-be home buy­ers and in­vestors the ques­tion is whether the Cape will con­tinue to of­fer bet­ter cap­i­tal growth prospects than other SA cities. And, if so, which ar­eas of Cape Town and sur­rounds of­fer the best buy­ing op­por­tu­ni­ties?

While past per­for­mance is of course no guar­an­tee of fu­ture per­for­mance, his­toric price growth num­bers do pro­vide a strong in­di­ca­tion of which ar­eas tend to be the most sought af­ter.

Light­stone’s data shows that Cape Town’s best-per­form­ing sub­urbs last year were Green Point and Sea Point on the At­lantic Seaboard, Gar­dens in the

City Bowl and the south­ern sub­urbs of Ron­de­bosch and Clare­mont. Seeff be­lieves the At­lantic Seaboard sub­urbs of Clifton, Camps Bay and the V&A Wa­ter­front should con­tinue to out­per­form on the cap­i­tal growth front. He says there is also grow­ing de­mand in nearby De Waterkant, Green Point and the Fore­shore fol­low­ing bil­lions of rands be­ing in­vested in new com­mer­cial, re­tail, ho­tel and res­i­den­tial de­vel­op­ments.

Seeff sin­gles out Big Bay and Blou­bergstrand Vil­lage in Blou­berg as Cape Town sub­urbs to watch. He says Big Bay still of­fers stand­alone houses and town­houses be­low R2m in a num­ber of se­cure es­tates.

Sandown Es­tate and Dune Ridge Es­tate are typ­i­cally fetch­ing R5m to R7m, while La Paloma of­fers a col­lec­tion of well-priced houses from R3m to R7m. The Is­land View se­cu­rity es­tate of­fers a mix of dou­ble- and triple-storey homes in the R1.8m-R2.8m range. “You are ba­si­cally across the road from the ocean and sur­rounded by un­spoilt fyn­bos.”

Fran­schhoek and Stel­len­bosch in the Winelands, which Seeff says have been ma­jor ben­e­fi­cia­ries of the semi-gra­tion trend, should con­tinue to lure up­coun­try buy­ers, as the area boasts an un­par­al­leled life­style offering and easy ac­cess to some of the coun­try’s best schools and Stel­len­bosch Univer­sity.

Gated life­style es­tates have be­come par­tic­u­larly sought-af­ter in the Winelands, says Louise Varga, PGP’s area man­ager in Stel­len­bosch and Som­er­set West. She ranks Brandwacht aan Rivier, De Zalze Winelands Golf Es­tate and Wel­gevon­den Es­tate among her top es­tate hotspots in Stel­len­bosch. At De Zalze, prices typ­i­cally range from R6m to R26m, but Varga says there’s a grow­ing short­age of stock. Buy-to-let apart­ments for Stel­len­bosch stu­dents are also a pop­u­lar in­vest­ment, with rental yields typ­i­cally at 6%-8%. In Som­er­set West, Scho­nen­berg and Bel’Air Es­tate of­fer good buy­ing op­por­tu­ni­ties, says Varga.

Basil Mo­raitis, PGP area man­ager for Cape Town’s At­lantic Seaboard and the City Bowl, says while it’s dif­fi­cult, if not impossible, to pre­dict the level of cap­i­tal growth prop­erty own­ers are likely to ex­pe­ri­ence in Cape Town over the next three to five years, the At­lantic Seaboard sub­urbs of Mouille Point, V&A Wa­ter­front, Sea Point, Green Point, Fres­naye and Bantry Bay

are likely to con­tinue to show strong de­mand amid lim­ited sup­ply. He notes that in the four years to the end of De­cem­ber, prices along this stretch of the Cape coast­line have in­creased by be­tween 141% (V&A Wa­ter­front) and 330% (Bantry Bay).

“The At­lantic Seaboard, which is within easy reach of the CBD, of­fers a de­sir­able life­style and spec­tac­u­lar ocean views in close prox­im­ity to the city’s best beaches, restau­rants, shops and nightlife,” he says.

Lisa Bathurst, di­rec­tor at Hurst & Wills in Cape Town, says Camps Bay has proved to be par­tic­u­larly re­silient dur­ing fi­nan­cial down­turns, record­ing an av­er­age price growth of 50% over the past five years. “Aside from the ob­vi­ous life­style ben­e­fits, Camps Bay is close to both the heart of Cape Town and its beaches, offering a great se­lec­tion of up­graded hol­i­day apart­ments and spa­cious fam­ily homes.”

Prices typ­i­cally range from R5m to R30m. Bathurst says Camps Bay is ever pop­u­lar with in­ter­na­tional buy­ers and lo­cal fam­i­lies alike, and of­fers great value in com­par­i­son to its Clifton and Llan­dudno neigh­bours.

Ac­cord­ing to the lat­est fig­ures from New World Wealth, Cape Town is home to SA’s top 10 most ex­pen­sive streets. The num­ber one spot goes to Dock Road at the V&A Wa­ter­front’s Ma­rina devel­op­ment, where buy­ers are pre­pared to pay an av­er­age of R108,000/m².

Other big-ticket streets in­clude The Ridge, Cliff and Net­tle­ton Roads in Clifton at an av­er­age R85,000 to R90,000/m²; Kloof Road in Bantry Bay at R82,000/m²; and Vic­to­ria Road, which stretches from Clifton to Bantry Bay, at R77,000/m².

Pic­ture: SEEFF

This lux­ury four-bed­roomed villa in Camps Bay is priced at just un­der R30m.

Pic­ture: SEEFF

A view of Som­er­set West and the Helder­berg from Erin­vale Golf Es­tate, where top-end prices are touch­ing R20m.

Pic­tures: SEEFF

Above: This uber-lux­ury home in Net­tle­ton Road, Clifton, sold by Seeff for R111m in early 2015, is back on the mar­ket for R150m. Left: Sit­u­ated in sought-af­ter Juli­ette at the V&A Wa­ter­front Ma­rina, this two-bed­roomed apart­ment over­looks the ex­clu­sive One&Only Ho­tel and is priced at R16m.

Pic­ture: PAM GOLD­ING PROP­ER­TIES

This four-level, six-bed­roomed house in Clifton on the At­lantic Seaboard has a price tag of R150m.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.