Mouille Point investments deliver returns
Tiny suburb has some of SA’s most prized real estate
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.