Subtle shift in seaboard scene

Sectional title sector in Atlantic suburbs gains market share

ALTHOUGH the exclusive Atlantic seaboard market has remained largely impervious to the economic downturn, there has been a subtle shift with the freehold sector ceding a fraction of its market share to the flourishing sectional title sector.

There are several key factors driving the expansion of the sectional title market, including a growing number of first time buyers, increased demand for lock-up-and-go convenience and ongoing densification in response to the growing demand for property.

This is according to Brendan Miller, Lew Geffen Sotheby’s International Realty Atlantic Seaboard and City Bowl chief executive, who says the rapid development of sectional title properties across all market segments is changing the landscape of the Atlantic seaboard and has also been a prominent driving force in the market’s consistent strength.

“Contrary to the current national trend, the flat market here is still very much a buyer’s market and we find that correctly priced properties are usually snapped up within two weeks of being released to the market.

“This has led to a dearth of sale stock, especially in the lower to mid-market segments, with property values spiralling upwards and record sales prices being achieved.”

Simony dos Santos of Lew Geffen Sotheby’s International Realty in Green Point, Sea Point and Three Anchor Bay, says: “Buyers are scrabbling for flats in these suburbs as they still offer an accessible, although increasingly scarce, entry point into this exclusive market.

“A modern studio or older one-bedroom flat in Sea Point, Green Point and Three Anchor Bay can still be bought from around R1.7 million, although entry level properties priced between R2m and R2.5m are now more common.

“Prices for two- bedroom and three-bedroom flats generally start at R2.8m and R3.6m, depending on condition and location, and a budget of between R4m and R8m offers buyers a much wider variety, from beautifully restored flats in older blocks to modern units in newer developments.”

Citing Lightstone data, Dos Santos says: “During the 12 months ending May 31, 150 sectional title properties changed hands in Green Point, 394 flats were sold in Sea Point and 80 changed hands in Three Anchor Bay.

“In all three suburbs, the R1.5m to R3m price band recorded the most sales.”

Agent Jolene Alterskye says: “Although we are seeing the most activity in the lower and mid-market sectors, it is at the top end of the market that we have seen the most significant growth and transformation in recent years.

“Preparation for the 2010 World Cup spilled over into these suburbs with extensive upgrades and exponential development boosting the top end of the market.

“Nowadays it’s not uncommon to see listings for flats priced between R14m and R19m, with several sectional title properties now qualifying for elite trophy home status, which was traditionally the preserve of the more expensive suburbs like Clifton and Bantry Bay.”

Another suburb to benefit from the development surge prompted by the World Cup is Mouille Point.

Miller says: “In less than 10 years, the average flat sale price in this small suburb grew by almost 350 percent, from R1.8m in 2007 to R8.09m by the end of 2015, during which properties seldom spent more than two months on the market and the average discrepancy between asking and selling price was only 5 percent.”

Miller says that in the preceding 12 months ending May 31, 24 of the 47 flats sold were in the R3m-plus bracket, with an average sale price of just under R6.4m, while only 15 sales were in the mid-market price band of R1.5m to R3m.

Another Atlantic seaboard suburb which has experienced a dramatic turnaround in recent years is Bakoven

Rapid sectional title development has catapulted it into the limelight and it now commands the highest rentals in South Africa.

“Last year six units in the recently developed Boulder flats were sold at an average price of almost R18m apiece, with the two most expensive flats fetching R33.6m at R78 209/m and R30m at just under R70 000/m2.”

Long regarded as the jewel in the crown on the Atlantic seaboard, Clifton flats have always commanded the highest prices and rewarded investors with the best return on investment, but the crown prince is now sharing pole position with Bantry Bay.

This is according to Lew Geffen, chairman of Lew Geffen Sotheby’s international Realty, who says that Bantry Bay has benefited greatly from the ongoing development of its thriving sectional title market.

“Deeds Office records show that Bantry Bay has increasingly dominated this market since 2010 with a 30 percent market share and 314 flat sales recorded at the end of April this year achieving a combined value of R1.6 billion.

“It’s closely followed by Clifton where 143 sales realised R1.3bn and Camps Bay with 222 sales fetching R1.045bn during the same period.”

According to Geffen, of the 46 flats sold in Bantry Bay during the past 12 months, 24 transactions were at the upper end of the market in the R3m plus price band at an average sale price of R7.62m.