Here’s why it’s all about mid­dle mar­ket mat­ters in th­ese pres­ti­gious sub­urbs

Weekend Argus (Saturday Edition) - - PROPERTY -

THE ENTRY level is the most ac­tive mar­ket seg­ment in most ar­eas of South Africa in the cur­rent eco­nomic cli­mate, but in cer­tain sub­urbs like those along the At­lantic seaboard, the mid­dle mar­ket is fast catch­ing up.

This is ac­cord­ing to Bren­dan Miller, Lew Gef­fen Sotheby’s In­ter­na­tional Re­alty At­lantic Seaboard and City Bowl chief ex­ec­u­tive, who says one of the main driv­ing fac­tors is the grow­ing num­ber of in­vestors with spe­cific re­quire­ments, which pushes prop­er­ties into the next mar­ket level.

“In­creas­ingly pop­u­lar and of­ten non- ne­go­tiable re­quire­ments in­clude open bal­conies with sea views, se­cure park­ing for two ve­hi­cles and apart­ments which are re­cently ren­o­vated.

“In cer­tain sub­urbs like Mouille Point, which has ex­pe­ri­enced ex­ten­sive re­ju­ve­na­tion and de­vel­op­ment in re­cent years, the average sale price has risen sharply to what is re­garded as ‘mid-mar­ket level’ for this area. Be­tween Jan­uary last year and the end of the first quar­ter of this year, there were 71 recorded sales at an average sell­ing price of R5.8 mil­lion.”

Miller says that on this pres­ti­gious coastal strip, which has the most ex­pen­sive real es­tate in South Africa and where lux­ury sub­urbs such as Clifton fea­ture many homes val­ued at over R30m, the sub­urbs of De Waterkant, Green Point, Mouille Point Sea Point East/ West and Three An­chor Bay are con­sid­ered mid-mar­ket ar­eas.

Jo­lene Al­ter­skye of Lew Gef­fen Sotheby’s At­lantic Seaboard in Green Point and Sea Point says: “The grow­ing de­mand is push­ing up prices and start­ing to af­fect avail­abil­ity, es­pe­cially on the beach­front. So if in­vestors looking to buy in the area come across a beach­front apart­ment in a se­cu­rity block of more than 120m for be­tween R6m and R8m, I would ad­vise that they grab it now be­cause th­ese prop­er­ties are be­com­ing very scarce.

“There are nu­mer­ous ben­e­fits to liv­ing on the prom­e­nade, in­clud­ing con­ve­nient prox­im­ity to the MyCiTi bus route, top class restau­rants, shops and health care and those who al­ready live there knowthey won’t eas­ily re­place the life­style. In fact, we’re find­ing that many units just don’t come on to the mar­ket. Fam­i­lies hold on to them for decades.”

Al­ter­skye says that the mid­dle mar­ket on the At­lantic seaboard is also be­ing fu­elled by in­creased interest from empty-nesters who want to down­scale and trade in their larger fam­ily homes for a low main­te­nance, lock-up-and-go life­style, with se­cu­rity and con­ve­nience be­ing high pri­or­i­ties.

She says flats in the mid­dle seg­ment are also be­com­ing in­creas­ingly at­trac­tive in­vest­ment op­tions for up­coun­try buy­ers who plan to re­tire in the Cape.

“This way they can get a foot in the mar­ket with­out hav­ing to sell their pri­mary res­i­dences yet, and the strong rental mar­ket means that they can sub­sidise a sub­stan­tial per­cent­age of the cost through rental in­come.”

Vivi­enne Got­tlieb, of Lew Gef­fen Sotheby’s In­ter­na­tional Re­alty in Sea Point, Green Point and Three An­chor Bay, says: “Houses in the mid­dle mar­ket here gen­er­ally fall in the R6m to R10m price band, with most of the higher-priced houses above High Level Road. How­ever, there is very lit­tle stock avail­able in the mid-mar­ket, and when prop­er­ties do come up for sale they are usu­ally older homes in need of ren­o­va­tion or small re­stored cot­tages and semi-de­tached homes.”

Got­tlieb says mid­dle mar­ket houses at­tract the most interest from younger lo­cal in­vestors and up­coun­try buy­ers in search of fam­ily homes.

Lew Gef­fen, chair­man of Lew Gef­fen Sotheby’s In­ter­na­tional Re­alty, says ac­cord­ing to Light­stone 69 per­cent (10 751 sales) of all trans­ac­tions on the At­lantic seaboard be­tween 2005 and 2015 were prop­er­ties un­der R10m, which re­alised a com­bined value of just more than R22 bil­lion.

“In this price bracket apart­ments sales ac­counted for 88 per­cent (9 458) with a com­bined value of R17.654bn, while houses made up only 12 per­cent of the sales (1 293) but around 20 per­cent of the value with a com­bined to­tal of R4.376bn.

“The average re­turn on in­vest­ment for houses in the mid­dle mar­kets recorded over five years was a spectacular nom­i­nal 15 per­cent year-on-year in­crease, with Three An­chor Bay in pole po­si­tion show­ing an 18 per­cent nom­i­nal year-onyear growth over four years. Green Point showed 16 per­cent year-onyear over five years.”

Gef­fen says mid- mar­ket flats fared equally well with an average re­turn on in­vest­ment of 15 per­cent over five years with the front-run­ners be­ing De Waterkant and Sea Point East which both recorded a nom­i­nal 16 per­cent year- on- year growth.

Miller says that South Africans still make up the ma­jor­ity of in­vestors on the At­lantic seaboard.

This north-fac­ing three-bed­room home in Three An­chor Bay is for sale at R7.5 mil­lion.

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