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