Weekend Argus (Saturday Edition)
Sectional title property dominates market
Solid year highlighted by market shifts for the Atlantic seaboard
SEVERAL emergent trends that have been germinating along the Atlantic seaboard in recent years have now taken root and triggered significant market shifts along this sought- after coastline, with one in particular completely changing the property landscape.
During 2015 it became evident that the once-dominant freehold segment was increasingly ceding more and more of its market share to the flourishing sectional title sector. However, last year sectional title clearly dominated the market with the lion’s share of sales across the area.
Brendan Miller, Lew Geffen Sotheby’s International Realty Atlantic seaboard and City Bowl chief executive, says this is clearly evidenced by the latest Propstats data.
“In 2015, there were 466 sectional title sales to a total value of R2.57 billion and 196 houses worth R2.4bn changed hands.
“However, from January to November last year, 475 sectional title sales worth R2.136bn were concluded and 145 house sales realised a total value of R2.13bn.”
He attributes this notable shift to several key factors: a growing number of first-time buyers, increased demand for lock- up- and- go convenience, and on- going densification in response to the growing demand for property.
Miller says that what has remained constant across the board is the steady growth in property values, with the average flat sale price on the Atlantic seaboard increasing from R5.3 million in 2015 to R5.47m this year and the average house price increasing from R12.28m to R14.73m during the same period.
However, while the entire seaboard residential belt shares the status of being one of the most stable markets in the country, there are different markets within the area that have all responded differently to the prevailing economy.
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says: “The luxury markets are generally more resilient to economic fluctuations as they tend to operate independently of general market trends, continuing to offer solid returns well above the average property price inflation rate when they are realistically priced.
“However, this top price band is not completely impervious and Lightstone data reveals that certain suburbs experienced more market activity than others during last year with median prices maintaining a solid upward trajectory, while sales in some suburbs were more subdued.
“Since 2011 the Camps Bay housing and sectional title markets have enjoyed solid year- on- year median price inflation, and despite the subdued economy, record prices were achieved this year.”
In 2015 the median flat price increased by 3.2 percent from R5.75m in 2014 to R5.93m, while during the same period the median price of houses grew by 9.6 percent from R9m to R9.87m.
In 2016 there was a notable spike in the median prices when houses reflected a yearon-year increase of 20.1 percent to R11.86m and flats rose by a whopping 47 percent to R8.75m.
Clifton’s market also fared well last year, making an excellent recovery from the sharp dip it took in 2015, says Geffen.
“The median price of flats shot up by almost 55 percent from R7.25m to R11.22m and house prices increased by 22.5 percent from R14.4m to R17.6m.”
Fresnaye’s sectional title sector also showed healthy growth with the median price rising by 27.6 percent from R3.8m to R4.85m.
However, the housing market flat-lined this year with the median price edging upwards by only a few rand.
And, after basking in the limelight last year, Bantry Bay took a knock all-round with the median price of houses dropping by 12.5 percent and by 32 percent for flats.
In the more accessibly priced suburbs from Sea Point to Green Point, ongoing development remained the order of the day with strong demand for flats in new developments.
According to agent Michael Meade, working in the Sea Point to De Waterkant areas, the only notable change last year was a decline in the mid- market sector, which he attributes to inconsistent pricing due to unrealistic seller expectations.
“We are finding that many sellers in this market are asking for the highest rand a square metre being achieved in the area, which is usually only achievable in luxurious new developments.
“They end up jumping between agents and wasting time, as they are eventually forced to reduce their price to make the sale.”
Another trend which wove itself deeper into the fabric of this vibrant stretch last year is mixed- use developments, which have become a significant element of Sea Point’s ongoing refurbishment.
Chad Shapiro, senior commercial broker for Lew Geffen Sotheby’s International Realty in the CBD, City Bowl and on the Atlantic seaboard, says: “The property sector as a whole has benefited from the balanced combination of fixed and variable tenants who are increasingly less dependent on location and tourism.”
Prominent projects include the extensive R100m redevelopment of The Ritz Hotel and the old Nedbank Building at the end of Main Road.