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Residential estates hit the mark with buyers for investment value and lifestyle
LIFESTYLE is a strong attraction for living on a residential estate, but the sound investment value – in capital appreciation and potential rental income – also speaks volumes to property buyers across the country, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
“Estate properties have staying power and usually perform better than similar properties in neighbouring suburbs. According to Lightstone’s data for the national residential property market for 2016 to August, house prices reflect average price inflation of 5.8 percent. In contrast, the Association of Residential Communities (ARC) website states that annual house price inflation in estates is 7.5 percent.”
Golding says that estates account for around 22 percent of the property market’s total sales value – up from 20.5 percent before the recession and remaining fairly stable since late 2013 – and unit sales in estates make up around 14 percent of the total market.
“In Gauteng estate sales have been gradually declining since late 2012, but this economic powerhouse region still accounts for the largest percentage of the total value of estate sales in South Africa, at around 55 percent. The Western Cape has a smaller but growing share of total estate sales of close to 29 percent. Interestingly, in both Gauteng and the Western Cape the R3 million-plus price band is a growing sector,” says Golding.
Among the major metros Pretoria in Tshwane Municipality is where the largest total number of units were sold in estates, whereas Johannesburg’s estate market is the largest by value. However, this margin is declining as the value generated by both Pretoria and Cape Town is increasing fast.
According to ARC there are about 6 000 gated communities in the country worth a total R650 billion.
These comprise around 320 000 residential properties at an average value of R2m each, which is three times greater than the estimated national average of R700 000 a home outside gated communities. Further statistics from ARC show that only about 12 percent of the total estates in SA are golf estates.
Over and above the investment potential and price appreciation already being achieved, Golding says more and more people are keen to live in security estates.
“The attractions of living on an estate go beyond security – there are many factors that attract people across all generations to an estate lifestyle. The new trend is towards lifestyle estates that encompass working, living, playing and shopping within a secure environment and provide a sense of community as well as easy access to educational facilities. Some estates even provide schools on site, and the leisure amenities encompass a host of features with the accent in newer estates on a broader lifestyle offering rather than as was previously the case, focusing mainly on one aspect. These facilities can also include gyms and other sports facilities and even shopping complexes.
“Generally these estates are in metropolitan areas, including new metro growth nodes where the cities or towns are expanding. These include Fourways in Gauteng, the rapidly expanding KwaZulu-Natal North Coast Corridor as well as Knysna on the scenic Garden Route.”
In the Western Cape’s Helderberg region, as well as the Somerset West and Stellenbosch areas there is a strong demand for estate living which is fuelled by a number of factors such as proximity to major business centres and schools, security, quality lifestyle attractions such as leisure and sports activities, aesthetic and scenic appeal, quality and design of houses and resale potential.
A further drawcard in residential developments is the fact that the sizeable monthly costs for water, electricity and garden maintenance incurred for large, freestanding properties are replaced by shared costs and hassle-free estate management.
Not surprisingly, the top 10 estates in SA recently ranked by New World Wealth are all in prime locations. These include Val de Vie, De Zalze, Atlantic Beach, Arabella, Fancourt and Pezula in the Western Cape, Steyn City in Gauteng, Highland Gate in Mpumalanga and Zimbali in KZN. Although some luxury home buyers are investing considerable capital in building their dream homes with cutting edge design, the latest technology and eco-friendly features, Lightstone statistics show that estate living is also becoming more accessible and is attracting a younger generation of home buyers, with more than 70 percent younger than 49 years.
“Catering for this market, which includes first time buyers, many estates have introduced sectional title units with starting prices of under R1m and offering excellent value for money,” says Golding.
Fancourt on the Garden Route is one of the top 10 estate in South Africa ranked by New World Wealth.