Bumper hol­i­day sales sea­son pre­dicted for Cape Town’s pri­mary sea­side sub­urbs

Weekend Argus (Saturday Edition) - - PROPERTY -

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

from Gaut­eng.

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.

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