Weekend Argus (Saturday Edition)
Watertight investments with views
Atlantic seaboard flats prove to be a safe bet in tight economic conditions once again
WITH average sales prices escalating by about 39 percent on average over the last few years, flats on the Atlantic seaboard – especially those of the V&A Waterfront Marina, Water Club in Granger Bay and Mouille Point – rank among the best property investments in the country.
Billy Rautenbach, sales manager for Seeff ’s Atlantic seaboard and City Bowl operations, says that a study of Lightstone data for sales, price growth and investment returns on resale for 2000 to last year, shows a booming flat sector with strong capital growth, driven by strong demand and keen investment.
Overall, the price a unit sold escalated by 39 percent.
At the V& A Waterfront Marina, canal flat prices rose by 20 percent year-on-year and font yacht basin prices by 31 percent.
Mouille Point and the Water Club flat prices meanwhile rose by 16 percent.
The study also shows that sellers achieved returns on their investments of about 17 percent to 19 percent on average over a seven-year holding period.
This, says Rautenbach, is against an average economic growth rate of about 3 percent to 4 percent at best and national average price growth of about 8 percent to 12 percent in nominal terms.
“The excellent growth is a clear signal that buyers and investors view flats in these areas as a sound investment vehicle.
“If we have learnt one thing in the aftermath of the 2007/8 economic downturn, the worst global turndown in history, it is that the Atlantic seaboard and flats specifically, are a sound investment,” says Rautenbach.
John Loos, FNB Home Loans household and property sector strategist, also pointed to the sectional title sector of the overall housing market as showing the best performance in general price growth.
The flat sector accounts for about half of the R7.3 billion in total sales recorded on Propstats for the Atlantic seaboard since the start of last year, generating a significant almost R3.65bn in value.
“Activity at the V& A Marina, Water Club and Mouille Point peaked in 2014 with 1 184 sales worth R3.66bn, notably more than the previous peak of 2007 when 1 365 units were sold to the value of R2.95bn.”
She says the first two quarters of last year were even better, both recording the highest sales in over five years of 277 worth R1.348bn and 237 sales worth R840m for the first and second quarters.
The luxury market of the V&A Marina showed outstanding performance with 219 units sold worth R661m in 2014 compared to the previous peak of 2007 when 395 units were sold to the value of R945.6m.
Finella Botes, Seeff ’s agent for the V&A Marina, Water Club and Mouille Point says that if buyers and investors find what they are looking for, they are still putting in excellent offers.
Botes recently sold two units at the marina, both in Kylemore, for the full listing prices of R11.995m and R12.995m. Both were cash sales to local buyers.
In Mouille Point too, she sold a two- bedroom unit in South Seas for R8.33m, just under the listing price, also achieving a significant rate of R65.591/m2.
“Prices at the V&A Marina have escalated notably since 2000,” says Rautenbach. “In 2007, the average price was R7.88m and by 2014 it had risen to R9.592m.
Canal flat prices rose by 303 percent from 2000 to last year and front yacht basin flats by a massive 469 percent. This amounts to annual growth of 20 percent for the canals and 31 percent for the front yacht basin.
“In 2000, the canal flats sold for R13.900/m on average. By the 2007 boom year, the average price was R44.386/m and by mid-2015t R56.036/m2.
“The average for the front yacht basin was R13.724/m2 in 2000.
“By last year, it had risen by more than five times to R78.136/m and flats were selling for about 40 percent more on average compared to those on the canals.”
The Water Club development in neighbouring Granger Bay overlooks a yacht-lined bay, and the five-star Radisson Blu Hotel and Granger Bay Hotel School are, making this neigh- bourhood absolute prime property, says Botes.
“Although there are six blocks – Antigua, Biscay, Calais, Elstree, Dover and The Water Club Court – stock is almost impossible to find, as the demand is so strong.”
During 2014/15 a total of 15 units worth R86.67m were sold at the Water Club. The most popular price band, the R5m to R10m range yielded an average sales price of R55.815/m about 36 percent more than the 2007 average of just over R40.000/m2.
The highest prices achieved were R10.15m for a 147m2 unit in Calais and R10.83m for a 128m unit in Biscay, both sold at an average of R76.829/m2.
Mouille Point consists of 34 flat blocks including new and modernised complexes and offers something to fit every lifestyle, says Botes. Aside from a premier seaside location, many of the flats have spectacular sea and mountain views.
In 2010, the average sales price for Mouille Point was R3.333m. By last year, it had escalated to R5.98m, which is a year-on-year rise of 16 percent.
“The R2.5m to R5m price band achieved an average sales price of R35.245/m last year and the next price band of R5m to R10m, an average of R47.634/m2. The luxury sector fared even better, achieving an average rate of R57.340/m on sales in the R10m to R20m price band.”
The latest addition, the new Amalfi flat block, raised the average sales price significantly to R136.364 to R168.076/ m2 although the agent says this is not yet the norm in the suburb.
“Given the limited land space and rising demand for flats in these areas, property values are likely to continue trending upwards.
“Activity over the shortterm, at least for the remainder of this year, is set to remain excellent and those still looking to sell should be able to find a good price,” says Botes.