Sandton lux flat sales drop
DEVELOPERS HAVE SURPLUS Increasing political uncertainty and downgrades of SA’s sovereign credit rating to junk have seen buyers put off purchasing decisions, says Kent Gush.
Four years ago Sandton became the destination of choice for SA’s major financial firms, sparking the decade’s largest commercial property development boom. Investec, Nedbank, RMB and the JSE were early movers in the 2000s. Sasol, Webber Wentzel, Alexander Forbes, EY and Bowman Gilfillan have since anchored their main offices there, with those of Discovery and Old Mutual Emerging Markets being built.
Property developers believe the Gautrain was the catalyst in 2010. Over the last three years, developers launched high-rise luxury apartments, piggy-backing on corporates’ relocation.
“Things have changed dramatically. Savvy investors are sitting on their hands at the moment,” said Kent Gush, Kent Gush Properties MD, who’s involved in four Sandton apartment developments, among them Katherine and West.
Sandton apartment sales have slowed amid falling demand. Property company Lightstone’s figures confirm this: 4 552 sectional title units were sold in 2016, and only 1 793 in 2017 so far.
Gush said developers are still concluding apartment sales, but not at the scale of three years ago.
“The strength of the luxury apartment market then was being driven by investors who made very good returns on investments into luxury apartments in Sandton.”
At the time, demand saw the average asking prices at some luxury apartment schemes – including the Michelangelo Towers and Da Vinci – fetch between R35 000 and R45 000 per square metre.
Additionally, Marc Wachsberger, MD at The Capital Hotel Group – which manages hotel and luxury apartment buildings The Capital 20 West and Empire in Sandton – said off-plan apartment sales have “ground to a halt”.
“Developers who change the price to reflect the difficult market will likely be able to sell.”
He said buyers still have an appetite for two- or three-bedroom apartments below R3 million.
Developers are also squeezed in neighbouring Melrose Arch, where Amdec Property Development’s broken ground on a luxury apartment development: One on Whiteley.
Expected to be completed in 2018, it’s already 70% sold. But Amdec MD Nicholas Stopforth said monthly sales have been slower in recent months.
Gush believes “Sandton will have its day in the sun again. At the moment, it’s undervalued compared with the prices achieved in Cape Town.” There are still pockets of growth in Gauteng – one of them being Rosebank. The area’s increasingly expected to overtake Sandton as the most desirable live, work and play node.
Its Gautrain station (since 2011) is viewed as its rejuvenation catalyst. Property developer Renprop MD Chris Renecle says the node is in walking distance to private and public schools, the Gautrain, entertainment spots and areas of work.
The relocation of corporates into Rosebank, including BP, Coca-Cola, Sappi, and Standard Bank, is expected to have a positive-spinoff for its residential market.