PROP­ERTY SHORTS

Financial Mail - Investors Monthly - - Contents - Prop­erty In­vest­ment edited by Joan Muller

Big city life lures for­eign­ers

Own­ing a pied-à-terre in Cape Town’s City Bowl is in vogue with for­eign in­vestors, judg­ing by the rapid take-up of res­i­den­tial units by off­shore buy­ers in what is soon to be the Mother City’s tallest build­ing.

More than 90% of the 44-storey Zero2-One Tower, a R1.5bn mixed-use de­vel­op­ment in the CBD, has been sold off­plan, with more than a third go­ing to in­ter­na­tional in­vestors, says Stu­art Chait, ex­ec­u­tive chair­man of the de­vel­oper, Land Eq­uity Group. “For­eign in­vestors are mostly from the UK, Switzer­land, Ger­many, the Nether­lands, France and Italy.”

Chait says off­shore in­vestors are drawn to mixed-use de­vel­op­ments as they are “alive” all day and pro­vide a “live, work and play” life­style in a se­cure en­vi­ron­ment.

Con­struc­tion on the build­ing is set to start next month.

Chait says a num­ber of mil­len­ni­als are buy­ing apart­ments in the City Bowl with the in­ten­tion of spend­ing half the year in Cape Town and the other half in Europe. “A lot of them are cash buy­ers,” he says. Land Eq­uity Group has noted an equally strong uptick in de­mand in re­cent months from for­eign in­vestors at some of its other Cape Town de­vel­op­ments, in­clud­ing The Iron Works, a 140-apart­ment block in Wood­stock, and The Dock­lands, a 134apart­ment block in De Waterkant that sold out to co-de­vel­op­ers be­fore be­ing taken to mar­ket.

Mean­while, most of the 170 apart­ments that form part of the newly opened Radis­son Blu Ho­tel & Res­i­dence, Cape Town, in Riebeek Street have also been sold. Pre­vi­ously known as Saf­ma­rine House, the for­mer of­fice build­ing in the heart of the city has over the past 18 months been trans­formed by de­vel­oper Sig­natura and landowner Stone­hill Prop­erty Fund into one of Cape Town’s most lux­u­ri­ous ho­tel and res­i­den­tial de­vel­op­ments.

Floors one to 11 form the Radis­son Blu Ho­tel, and floors 12 to 23 will house up to 170 one- and two-bed­room (40m²-88 m²) sec­tional ti­tle apart­ments. This sec­tion in­cludes seven 97 m²-214 m² pent­houses, and three three-bed­room pent­houses of up to 290 m².

Big­ger is bet­ter in re­tail

Larger malls are still out­per­form­ing their smaller coun­ter­parts, lat­est re­tail sales fig­ures from Broll Prop­erty Group show. In fact, re­gional shop­ping cen­tres sized 50,000 m²-100,000 m² are record­ing the best trad­ing den­sity growth (sales/m²) fig­ures of all types of cen­tres, ac­cord­ing to the Broll Re­tail Snap­shot Q4: 2016 re­port.

The re­port shows re­gional and small re­gional cen­tres (be­tween 25,000 m² and 50,000 m²) were the best per­form­ers dur­ing the De­cem­ber pe­riod, record­ing growth of 7.9% and 6.1%. Com­mu­nity cen­tres (12,000 m²-25,000 m²) were the worst per­form­ers, post­ing a drop of -0.8%, while con­ve­nience (less than 6,000 m²) and neigh­bour­hood (6,000m²-12,000 m²) cen­tres recorded trad­ing den­sity growth of 4.2% and 3%.

Broll’s divi­sional di­rec­tor for re­search, Elaine Wil­son, says De­cem­ber is a busy pe­riod for the re­tail mar­ket, with con­sumers likely to spend more. “Re­gional and small re­gional cen­tres of­fer an over­all shop­ping ex­pe­ri­ence with ac­cess to var­i­ous re­tail of­fer­ings un­der one roof, hence these cen­tre types tend to have an in­crease in sales dur­ing the fes­tive pe­riod.”

Ac­cord­ing to Sta­tis­tics SA, at cur­rent prices, re­tail trade sales in De­cem­ber 2016 amounted to R108.862bn, up 0.9% from R100.307bn year on year.

The Broll re­port shows gen­eral deal­ers per­formed ex­cep­tion­ally well in con­ve­nience cen­tres, record­ing growth of 22.3% com­pared with 7.1% and 7% at re­gional and small re­gional cen­tres.

“That may well be as a re­sult of the con­ve­nience and ease of ac­cess on of­fer in these smaller cen­tres, which have be­come im­por­tant fac­tors to time-strapped con­sumers,” says Wil­son.

Mean­while, the food and drink cat­e­gory was a top per­former at small re­gional cen­tres, post­ing year-on-year sales growth of 11.8% against con­ve­nience and re­gional cen­tre growth of 9.5% and 3.6%.

Cape Town still on the up

House prices in Cape Town are still ris­ing at a faster pace than those of the rest of SA. FNB’s lat­est hous­ing data shows that in the fourth quar­ter of 2016, the es­ti­mated av­er­age house price growth rate in the city re­mained in dou­ble-digit ter­ri­tory — to the tune of 13.2% year on year, com­pared with less than 5% in most other cities.

FNB’s new set of price in­dices for key sub­re­gions in the city shows that the top­per­form­ing ar­eas are gen­er­ally those lo­cated near Ta­ble Moun­tain.

The strong­est year-on-year growth (22.9%) was on the At­lantic Se­aboard. The City Bowl was not far be­hind, with a fourth-quar­ter year-on-year house price growth rate of 20.1%. The so-called “city near east­ern sub­urbs”, which in­clude Wood­stock and Salt River and stretch east as far as Pinelands, showed 15.8% growth, while the south­ern penin­sula sub­urbs of Fish Hoek, Kom­metjie and Si­mon’s Town achieved the fourth-best growth in Cape Town and sur­rounds, at 14.7%.

One of the pent­houses at the newly opened Radis­son Blu Ho­tel and Res­i­dence Cape Town.

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