Mouille Point in­vest­ments de­liver re­turns

Tiny sub­urb has some of SA’s most prized real es­tate

Weekend Argus (Saturday Edition) - - PROPERTY -

MOUILLE Point is a tiny, af­flu­ent sub­urb of Cape Town with only two ma­jor roads.

It hugs the coast­line south of the V&A Water­front, north of Sea Point and west of Green Point, and con­sists mainly of high-rise blocks of flats. Be­hind them lies Green Point Com­mon, site of the new ur­ban park and the re­vamped Metropoli­tan Golf Course, as well as Cape Town Sta­dium.

Mouille Point has some of the most prized real es­tate in South Africa, says Chantelle Paans, sales di­rec­tor of Se­eff At­lantic Seaboard, CBD, City Bowl, V&A and Camps Bay.

Se­eff re­viewed re­cent flat sales in Mouille Point in three price cate gories: R500 000 t o R2.5 mil­lion; R2.5m to R10m; and R10m to R15m. The anal­y­sis found that be­tween the sec­ond half of 2009 and the first half of 2010 there was good price growth of 11.36 per­cent in the top bracket. Dur­ing the sec­ond half of 2009, the av­er­age value in this price cat­e­gory was R11m and dur­ing the first half of 2010, the av­er­age price in­creased to R12.25m.

The mid­dle price cat­e­gory grew 20.75 per­cent be­tween the first and sec­ond halves of 2009, with an in­crease in av­er­age price from R4.154m to R5.01m. How­ever, dur­ing the first half of 2010, sales in this cat­e­gory slowed con­sid­er­ably, when the av­er­age price was R3.41m.

The anal­y­sis showed that dur­ing the last half of 2009 and first half of 2010 the most ac­tive price bands at the mid­dle and lower end were R3m to R4m and R1m to R1.5m.

Of note was that in the first six months of 2009, the up­per p r i c e c a t e g o r y ( R1 0 . 0 1 m t o R15m) was in­ac­tive, and dur­ing the sec­ond half of 2009 and the f i r s t h a l f o f 2 0 1 0 i t s h owe d three sales worth R35.5m.

Paans says that the cor­rect w ay t o m e a s u r e t h e p r i c e growth of a block of flats is to cal­cu­late the re­sale value of in­di­vid­ual units, mea­sured as a per­cent­age.

“We did a full growth rate anal­y­sis cov­er­ing about five years for all the blocks in Mouille Point,” she said.

Re­sults had shown that prices in the newer blocks all in­creased by more than 10 per­cent for each year, “and just a few of the older apart­ment blocks dipped be­low this”.

Some nom­i­nal growth-rate re­sults for newer blocks were: New Cum­ber­land, 11 per­cent (as­sessed over five years and three months); Mouille Sands, 18.6 per­cent (seven years, one month); South Seas, 11 per­cent (five years, four months); The Break­ers, 16 per­cent (five years three months) and Two Oceans Beach, 14 per­cent (five years, seven months).

Paans says a flat in Two Oceans Beach was bought in 2006 for R6.875m and sold in 2010 for R10.4m. The gross gain was R3.525m over three years and four months – or 13 per­cent nom­i­nal growth year on year.

The year-on-year nom­i­nal growth in some of the older blocks were as fol­lows: Dol­phin Court, nine per­cent (as­sessed over five years); Ed­ward Court, three per­cent (five years, nine months); Rho­dara, 17 per­cent (six years, four months); Sand r i n g h a m, 1 7 p e r c e n t ( s i x ye a r s , n i n e mo n t h s ) ; Vi l l a Capri, 11 per­cent (five years, two months) and Villa Ma­rina, 1 5 p e r c e n t ( f i ve ye a r s , o n e month).

Paans says in­vestors re­alise that buy­ing cor­rectly priced prop­erty in Mouille Point is a solid in­vest­ment. She says Se­eff ad­vises that, if pos­si­ble, the hold­ing pe­riod of a prop­erty should be at least three years.

“The costs of ac­quir­ing a prop­erty re­duce profit when you sell again, and be­come mean­ing­ful as a per­cent­age of the profit when the time be­tween ac­qui­si­tion and dis­posal is too short,” says Paan.

Apar tments in Mouille Sands, where sales be­gan in 2001, had de­liv­ered the best re­turns on in­vest­ment.

“We took the four most re­cent Mouille Sands re­sales, dur­ing 2008/09, and cal­cu­lated t h e ye a r-o n - ye a r n o m i n a l growth.

“Best growth was in an apart­ment bought in the first quar­ter of 2002 for R1.6m and sold in the fourth quar­ter of 2009 for R7.6m, giv­ing a yearon-year growth of 22.5 per­cent and a cap­i­tal gain of R6m.

“The other three re­sales we r e a s i m p r e s s ive, w i t h growths of 16.2 per­cent (over six years, six months), 19.8 per­cent (six years, eight months) and 15.8 per­cent (seven years, three months),” she said.

SOLID IN­VEST­MENT: New Cum­ber­land in Mouille Point showed an 11 per­cent av­er­age year-on-year nom­i­nal growth rate in flat prices, as­sessed over five years and three months, says Se­eff.

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