Stel­lar in­vest­ment re­turns for sell­ers of seaboard properties

Weekend Argus (Saturday Edition) - - PROPERTY -

SELL­ERS of prime At­lantic seaboard prop­erty in the sub­urbs of Fres­naye, Bantry Bay and Clifton have re­alised stel­lar in­vest­ment re­turns of 21 to 24 per­cent on free­hold homes and 16 to 20 per­cent on sec­tional-ti­tle properties sold over the past 18 months in the price band of R10 mil­lion and above, says Se­eff ’s man­ag­ing di­rec­tor for the ar­eas, Ian Slot.

“The Se­eff study is based on free­hold and sec­tional- ti­tle prop­erty sales be­tween Jan­uary last year and the end of June this year, and an aver­age hold­ing pe­riod up­wards of five to six years.

The study shows that 36 free­hold and sec­tional- ti­tle properties, with an an­nual aver­age hold­ing pe­riod of just over six years that were sold dur­ing the pe­riod, yielded a gross profit of al­most R400m for the sell­ers.

“There are ob­vi­ously ex­cep­tions, for in­stance, own­ers who needed to sell ur­gently may have had min­i­mal cap­i­tal growth, or im­prove­ments or ren­o­va­tions would boost the cap­i­tal growth value. But the study shows that on the whole, sell­ers are still real­is­ing sig­nif­i­cant in­vest­ment re­turns.

“Al­though still nowhere near the pre-2007/8 lev­els, in the past year we have seen a note­wor­thy im­prove­ment in in­vestor sen­ti­ment at the top end of the mar­ket,” says Slot.

He says about 127 properties worth more than R3.5 bil­lion were sold in th­ese sub­urbs for the pe­riod un­der re­view. Based on this, free­hold prop­erty sales in the R10m to R20m price band showed an aver­age in­vest­ment re­turn of 21 per­cent a year, whereas those above the R20m mark yielded 24 per­cent.

Fres­naye came out tops at an aver­age yield of 23 per­cent in the R10m to R20m price cat­e­gory, and 32 per­cent above this price band. Bantry Bay yielded 21 and 24 per­cent and Clifton 20 and 21 per­cent re­spec­tively in the two price bands.

“A home in Av­enue Des Huguenots, Fres­naye, which was bought in early 2005 for R3.3m was sold ear­lier this year for R21m, yield­ing an aver­age a nnual c apit a l g r owth o f 26 per­cent and a profit of R17.7m for the seller,” says Slot.

“A Clifton villa in Ocean View Drive, which was also bought in 2005 for R5.4m, was re­cently resold for R19m, an in­crease of 21 per­cent and a profit of R13.6m.”

Slot says that Clifton sect i onal- t i t l e prop­erty sales showed an aver­age yield of 20 per­cent over a six-year pe­riod, and Bantry Bay sales yielded 16 per­cent on aver­age.

“A 144m apart­ment in Heron­wa­ter on the sea­side of Vic­to­ria Road in Clifton, was bought in early 2009 for R7.5m and was resold ear­lier this year for R13.5m, which is a 17percent re­turn in un­der four years. A 167m2 apart­ment in Bantry Place over­look­ing the sea was bought in mid-2011 for R8.5m and was resold ear­lier this year for R12.3m – a 31 per­cent in­crease in price and a profit of R3.8m in just more than one year.

A 518m2 pent­house at The Pres­i­dent in Bantry Bay, which was bought in mid-1992 for just over R3m, was resold by Se­eff late last year for R23.5m, yield­ing a profit of over R20m.”

Slot says the study il­lus­trates that peo­ple who have bought smart and held on to their properties for five years or more have had sig­nif­i­cant in­vest­ment re­turns.

“This is very much in line with the find­ings of the 2013 Knight Frank Wealth Re­port, which notes that es­pe­cially in view of the con­tin­ued global eco­nomic in­sta­bil­ity, rich peo­ple are in­vest­ing in more lux­ury homes as a safe haven.

Ac­cord­ing to the re­port, just more than 25 per­cent of their to­tal net worth was ac­counted for by their main res­i­dence and sec­ond homes in the past year. And 25 per­cent of re­spon­dents in­di­cated that they would add to their res­i­den­tial port­fo­lios this year, com­pared with only 19 per­cent last year.

“On a re­gional ba­sis, 40 per­cent of Mid­dle Eastern and African and 34 per­cent of Asian re­spon­dents in­di­cated that they were likely to in­vest in prop­erty this year, com­pared with 17 per­cent of Euro­pean and US re­spon­dents.

African, Asian and Mid­dle Eastern res­i­den­tial prop­erty in­vest­ment on the At­lantic seaboard and in the Cape Town city bowl more than dou­bled dur­ing the first half of this year, com­pared with the whole of last year,” says Slot.

VALUE: Sell­ers of properties priced above R10m in sub­urbs like Clifton have had re­turns on in­vest­ment of be­tween 20 and 21 per­cent over five to six years, says real es­tate agency Se­eff.

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