Bumper holiday sales season predicted for Cape Town’s primary seaside suburbs
AS THE city braces itself for the annual influx of local and foreign visitors, Seeff ’s Atlantic Seaboard managing director, Ian Slot, says the agency is predicting a bumper holiday property sales season.
“If the performance of the market for this year and especially into the start of the summer months is anything to go by, then sellers who are serious about selling can look forward to good offers over the next few months. The city’s growing prominence as a diverse tourist destination and the favourable exchange rate are a definite boost for the market,” he says.
This positive sentiment was also highlighted in a recent media statement by Cape Town Tourism chief executive officer Enver Duminy, who said that the favourable exchange rate and the city’s recent spate of international accolades were set to contribute to a good tourist season. The peak tourism season usually runs from October/November until the end of April, when the foreign tourist season ends.
According to Slot, property sales traditionally peak over this period and agents are already reporting a pick-up in sales since the start of October.
“In the last month alone, Seeff has sold 33 properties worth R135 million, just over half of all sales on the Atlantic Seaboard for the month. Seeff ’s year-to-date sales amount to almost R1.02 billion,” he said.
That the city is the top visitor destination on the continent was reinforced by the Lonely Planet’s Best in Travel 2014 that rated Cape Town as the third-best tourist destination in the world. Meanwhile, the UK Telegraph Travel Awards named it the top tourist city for the second consecutive year, citing the diverse tourism offerings, including its Blue Flag beaches, cosmopoli- tan lifestyle, the winelands and other leisure activities.
Slot says that it is not only foreign visitors who set their sights on buying property when visiting the city, but also local visitors, especially those
Market activity across the Atlantic Seaboard has strengthened
That tourism is a good boost for the property market is also clearly reflected in the foreign buying activity across the Atlantic Seaboard and City Bowl, says Slot.
“The biggest foreign buyer source markets continue to be the UK and northern European countries, most notably Germany, the Benelux and Nordic countries. The growth in foreign visitors from the East – China, India and the Middle East – and from Africa’s top emerging economies, however, is driving a shift in foreign buying patterns.
“Foreign buying this year has been at the best level seen in the past five years. For the January-October 2010 period, about 90 properties worth almost R440m were sold to foreign buyers. Comparatively, sales activity is up by a significant 82 percent to 164 property sales worth just over R1bn this year. The UK and Europe account for about 60 percent with a total of about 99 sales to the value of just over R602m. African buyers account for 26 sales (16 percent) worth almost R234m and buyers from the Middle and Far East account for 22 sales (13 percent) with a combined value of R92m.”
Slot says it should also be noted that though there has been a handful of high-value sales to foreign buyers this year, including a R50m property in Clifton that was sold by Seeff, by far the majority of sales fall below the R10m price band. Foreign buying also only account for about 12 percent of total sales across the Atlantic Seaboard and City Bowl and this is negated by sales of foreign-owned properties, leaving a net effect of only around 4 to 5 percent of total sales.
On the whole, market activity across the Atlantic Seaboard alone has strengthened by about 48 percent since 2009, when sales volumes effectively dropped to about half of the pre-2007/8 levels, says Slot.
“In 2009 for example, a total of 506 sales to the value of around R2.3bn were recorded for the first 11 months of the year for the area as a whole. Comparatively, about 748 properties worth just over R3.57bn have been sold during the same period this year. The more value-driven sector of the market, below R5m, has seen the
More than 80 percent of all sales this year have been in cash
highest activity with about 72 percent (535 units sold) this year. A further 18 percent of all sales (133 units) fall into the R5m to R10m price band, and only 11 percent (80 sales) fall above this price band and include 21 sales above R20m.
“Most notably, we have seen the difference between the listed and selling price reduce to an average of 12.8 percent from about 14.1 percent last year. The number of days on the market are also down to just over 120 on average, compared with 153 days during the same period last year.
“More than 80 percent of all sales this year have been cash deals, with about a 70/30 split between primary residential and holiday home and investment buying,” says Slot.
The now well- publicised stock shortage is two-fold, says Slot. There is still a clutter of overpriced properties listed in some areas and though there is buoyant demand, buyers are not in a hurry and are quite prepared to wait for the right property at the right price.
“Too many sellers still tend to award mandates on the basis of unrealistic price promises, and risk low buyer interest, a protracted period on the market and price drops in the event that they really need to sell. If you are serious about selling, listing at the right price and with an optimal marketing strategy is vital; buyers are simply too smart about market conditions,” he says.
“The conservative mortgage landscape is also still impeding sales, especially in the sub-R3m price sector of the market, where buyers often rely on finance. Although the banks are finding value, they are definitely missing out on good opportunities. History has shown that property in Cape Town has the propensity for some of the highest capital growth rates in the country and though price growth over the past five years has been more conservative, sellers who have bought smart and held on to their property for at least five years and longer have seen average growth rates of between 12 to 18 percent on resale this year,” says Slot.