Leonardo hits new heights
Three luxury penthouses with price tags of R45m apiece have already been sold offplan at exclusive mixed-use development, The Leonardo, which is set to become Sandton’s tallest building on completion within two years.
190 apartments with a total sales value of R1.1bn have been sold at the Legacy Group’s and Nedbank’s new skyscraper, which is under construction in Maude Street, a stone’s throw from the JSE. Six of the building’s proposed 42 storeys have been completed.
Legacy Group sales director Gijs Foden says the development is already sold out up to the 33rd floor. When The Leonardo was first launched just over a year ago, prices of one-bedroom apartments started at R3.2m including Vat (or R45,000/m2). Apartments spanning floors 28 to 31 were recently brought to the market at R4.1mR16.m including Vat. Eight penthouse apartments sized between 540m2 and 600 m2, of which three have already been snapped up, are selling for between R40m and R45m. Foden says this translates to R60,000/m 2- R68,000/m 2.
Demand has been so strong that the group is considering extending The Leonardo from 42 to 52 storeys. It will include five storeys of sectional-title offices, a restaurant, business centre, reception, gym, play school, spa, lounge, pool, as well as retail outlets.
Foden believes sales at The Leonardo has been driven by the development’s lifestyle offering centrally located in SA’s prime business hub, within walking distance of the Gautrain station and Sandton City.
“The majority of buyers are locals who view The Leonardo as a secure, lifestyle investment with strong capital growth potential.”
Foden says the Legacy group has a proven track record in Sandton. Investors in the group’s other Sandton developments — The Michelangelo Towers, The Raphael and The DaVinci — all on Nelson Mandela Square, have in recent years reaped huge capital growth, which Foden says underscores the demand for apartment living in the Sandton CBD.
The development’s pièce de résistance is a 2,700m2 triple-storey penthouse — The Leonardo Suite, on the market for R250m. The luxury abode at the top of the building will have a 900m2 rooftop garden, a 20 m lap pool, a private lift, staff quarters, six garages, a gym, a cinema and an entertainment area. If the Legacy group fetches its asking price, the development will set a new SA sectional title record. The highest price paid to date for an apartment is believed to be R110m (2008) for a 1,076 m2 penthouse at the One&Only Waterfront hotel in Cape Town.
Residential tenants suffer
There has been a gradual deterioration in tenant payment performance nationally, no doubt due to continued pressure on household balance sheets.
Latest data from credit bureau TPN shows the number of residential tenants who pay rent late or only partially has risen from about 27.5% at the end of 2014 to 34% in the first quarter of 2017. TPN says the decline in tenants in good standing — those who pay rent in time and in full — since late 2014 coincided with the start of the latest interest rate hiking cycle. Rates increased by two percentage points from early 2014 to early 2016.
However, TPN says the percentage of tenants who do pay in full and on time is still above the record lows of 2008. “First, the most recent interest rate hiking cycle has been far more moderate than the previous hiking cycle from 2006 to 2008. Whereas the prime rate peaked at 15.5% in 2008, it now is a far lower 10.5%. Second, though the economic growth and household disposable income growth rates have slowed in recent years, they have not contracted as sharply as in 2008-2009.”
Cape Town rentals ahead
There is still robust demand for rental accommodation in the Western Cape, judging by the solid 12.53% rental growth recorded in the province in the first quarter year on year, latest FNB figures show.
That compares to a more muted 4.71% for SA as a whole. Gauteng performed slightly better than the national average at 5.74%; KwaZulu Natal lagged at 2.71%.
FNB property strategist John Loos believes much of the housing market strength in the Western Cape, especially Cape Town, is because it has marketed itself successfully as a lifestyle destination and one that’s well managed and run.
“The result has been a strong migration of middle to higher-income households to the province, which has exerted upward pressure on its house prices.”
Loos says the ongoing migration to the Western Cape of a combination of working and business people, as well as retirees, is visible in FNB’s studies of repeat home buyer migration between provinces.
FNB estimates show the Western Cape had an estimated net inflow of repeat home buyers of +12.2% of total repeat home buying. Gauteng had a net outflow of repeat home buyers of -3.2%. The other major provinces didn’t fare much better.
Loos says the upward pressure on house prices this repeat home buyer migration has caused has contributed to affordability challenges for many in this relatively land-scarce province, especially (but not only) younger, aspirant first-time buyers, which is supporting rental demand and therefore rental growth.
An artist’s impression of The Leonardo (far left), set to become Sandton’s tallest building