Sunday Times

Foreign buyers lead at the top end


● Seeff Properties, one of SA’s largest estate agency groups, says more foreign buyers are snapping up luxury properties than locals, who are more cautious about the country’s economic prospects.

However, estate agencies report that the number of sales of high-end properties is still sharply down compared to a few years ago, as local buyers, who still outnumber foreign buyers, are spending less on property.

Seeff Properties chair Samuel Seeff said this week that SA’s high-end buyers “continue reflecting the decline in confidence which has been evident since 2017”.

“They are simply not prepared to invest more into the property market until they see GDP growth and demonstrab­le action on corruption and the state-owned enterprise­s. When they do buy, they are spending much less on real estate, possibly choosing to shift the remainder into offshore assets.”

But foreign buyers are optimistic.

Seeff Properties says foreign buyers — predominan­tly from the US, United Arab Emirates (UAE), Germany and the UK — are showing significan­tly more confidence in the upper R20m-plus end of the real estate market than South Africans. It also reports interest from Zimbabwean and Malawian buyers.

Seeff says foreign buyers find the “value propositio­n in SA outstandin­g” taking into considerat­ion SA’s strong legal, banking, property ownership and infrastruc­ture systems. The “best value to be had is at the very top end of the market” where prices in the R20m-plus sector have not moved since 2016/17, he adds.

“That means that you are effectivel­y finding properties, many of which are new listings not seen before, at prices which are 20%-30% below what they would have been in a growing economy. If you combine that with what your dollars, pounds or euros can buy you in SA, it is a significan­t value propositio­n,

not just for foreign buyers but also a lost opportunit­y for SA’s wealthy buyers.” Erwin Rode, CEO of Rode & Associates, says “there is no doubt” prices in the upper end of the market have “come down more than the rest”. His view is that sellers in the top end are those who are “more footloose, read newspapers and become more depressed about the country than the ordinary souls who are salaried.

“It’s quite possible then that it’s a question of bargain hunting by foreigners, if that is the case, but I can’t confirm this.”

Seeff says foreigners mostly favour coastal areas such as Cape Town’s Atlantic Seaboard/City Bowl and Plettenber­g Bay. “Atlantic Seaboard/City Bowl sales to foreign buyers over the last year are a whopping 36% higher compared to 2019 and the highest that it has been over the last three years.”

He says almost a third of all high-value properties fetching more than R20m across the Atlantic Seaboard have been sold to foreign buyers who have paid five of the highest prices in the country, ranging from R30mR70m. The group’s biggest transactio­ns include

a R45m sale at the Waterfront last weekend to a German buyer — the highest price achieved there since 2013, Seeff says.

Seeff Properties recently sold a Fresnaye property for R36m to a buyer from Dubai in the UAE and is concluding a sale in Plettenber­g Bay that “will be the highest price achieved over the last few years”.

The company recently sold two properties for more than R20m in Constantia Upper to buyers from Zimbabwe and Malawi.

But Seeff says in general the market above R20m is still down about 60% since 2017 in terms of sales, even with the higher volume of sales to foreign buyers.

“Despite the better than expected activity” there were only 21 sales above R20m over the last year versus 65 three years ago. “Where prices of up to R100m to as much as R290m were reached up to 2017, the highest price reached over the last two to three years is around R75m,” Seeff says.

Other large estate agency groups report increasing interest in SA’s top-end market by foreigners, but say it is still dominated by local buyers.

Lew Geffen Sotheby’s Internatio­nal Realty says there are opportunit­ies for locals and foreigners, with prices in the top end having come down between 10% and 20%.

Chris Cilliers, CEO and co-principal of Lew Geffen Sotheby’s Internatio­nal Realty in the Winelands, says the group has “definitely started” to see more activity and enquiries from potential foreign buyers, particular­ly regarding “agricultur­al properties with luxury homesteads”. But she says the travel ban to SA is making it “very difficult” for internatio­nal buyers to commit, and until the country is taken off the “red list” and more flights are available, it will “continue to be an issue in terms of internatio­nal buyers”.

Because of the travel restrictio­ns, foreigners remain a “small proportion of our buyers” in the top end, Cilliers says.

However, the group has experience­d an uptick in local buyers recently as they realise “there is possibly a window of opportunit­y to buy currently with price stabilisat­ion and low interest rates”.

Joanna Thomas, area specialist in Constantia for Lew Geffen Sotheby’s Internatio­nal Realty, also reports “good activity” from foreign buyers.

“We have been receiving many overseas enquiries — often the interested parties are asking family members, friends, to view and even carry out FaceTime or video tours. We have made numerous sales to overseas buyers in recent months and we continue to have many waiting to come to SA ready to purchase.”

But Thomas says her agency has also seen a lot of “local activity”.

Steve Neufeld, manager principal for the group in Plettenber­g Bay, says on average internatio­nal buyers have made up about 7% of the overall market in Plettenber­g Bay, but this had declined to around 4% “for the obvious reason 1of travel restrictio­ns due to Covid-19”.

“We expect there to be an increase again once the virus is under control,” he adds.

Andrew Golding, CEO of Pam Golding Property Group, says there has been a “noticeable

uptick in activity at the top end of the market” and “positive signs of recovery” with recent sales to locals and foreigners.

“In recent months, including the December festive season, we have successful­ly concluded sales on the Cape’s Atlantic Seaboard and in Johannesbu­rg’s northern suburbs at prices from R20m to in excess of R30m and even up to R70m. Buyers are a mix of local and internatio­nal purchasers.”

Golding says the group recently sold several homes in the R20m-R30m price band in Sandhurst and Hyde Park, including a penthouse apartment in The Houghton for R20m.

“Half of these recent acquisitio­ns were by locals, with the balance to foreign buyers predominan­tly from the rest of the African continent.”

Golding says the group recently sold a luxury Clifton bungalow on 4th Beach for R70m to an upcountry buyer for use as a holiday home — “the second highest price for a residentia­l property on the Atlantic Seaboard this year”. This follows the group’s sale of another Clifton house for R37m to a buyer from Dubai in December.

The highest price achieved for a penthouse for the Pam Golding Group in the past 12 months was the sale of an apartment for R41.4m in The Marina at Cape Town’s V&A Waterfront.

But Golding says SA’s luxury residentia­l market, which spans values from about R10m-R100m and beyond in rare cases, remains a “predominan­tly local market, with foreign buyers comprising less than 1% of total sales in any given time period”.

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 ?? Picture: Supplied ?? This luxury villa in Fresnaye on the Atlantic Seaboard sold for R36m to a buyer from Dubai.
Picture: Supplied This luxury villa in Fresnaye on the Atlantic Seaboard sold for R36m to a buyer from Dubai.
 ??  ?? Andrew Golding, CEO of the Pam Golding Property Group
Andrew Golding, CEO of the Pam Golding Property Group
 ??  ?? Seeff Properties chair Samuel Seef
Seeff Properties chair Samuel Seef

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