FEATURE
Urban Hotspots
Where to Invest in the New Year
BY MONIQUE DU TOIT
W ith many experts warning to take your money out of South Africa, the idea of investing in local property can be daunting. The reality, however, is that there are plenty of opportunities to be had- and returns to be made- if you know where to look.
According to the latest Pam Golding Residential Property Index, three interesting trends have emerged. First, the price band below R1 million is still very active- recording national price inflation of 6.31 % compared to the average of 4.25 % across all price bands. Secondly, and unsurprisingly, we’ ve seen that the Cape Town market continues to grow, with house price inflation of 9,81 % across the Western Cape. In contrast to this, the apparent rebound observed in the Eastern Cape in late 2016 seems to have lost momentum. The third trend is that there seems to be an increase in sales in the super luxury class( properties valued between R10 million and R50 million) over the past five years. Similarly, luxury properties( those priced from R3 million) have seen steady sales rates.
Coastal properties continue to retain their value at a higher rate than inland properties, with Lightstone’ s research indicating that properties located within 500m of the coastline showing growth of + 2.7 % in the third quarter of 2017.
Urban growth
According to recent research by Savills, major global demographic and technological changes are bringing about what is called the“ Fifth Age of Cities.” In effect, this means that global cities are now entering an age where the focus is on quality of life and human capital, rather than traffic and money. This could explain the growing demand for smaller properties within the CBD, rather than larger ones that require a lengthy commute. This is especially evident among young professionals, looking for high quality accommodation within the urban environment.
This trend is not only evident in Cape Town, but has also emerged in the CBDs of Durban and Johannesburg. As central city districts are becoming more established and efficient, we’ ve seen an uptick in interest from investors to get into the urban property. In Gauteng, the increase in new businesses and office along the N1 between Johannesburg and Pretoria has resulted in what has been called“ Jo-Toria”, with the two cities effectively merging into
WHO’ S BUYING?
Several trends influence the demand for luxury properties, including the migration of HNWI from the north of the country to coastal areas, the increased interest from the investment market, and the small increase of foreign buyers both from Africa and other continents.
The super luxury segment and ultra super luxury segment( R50 million to R100 million) are bought by local and international buyers. This seems to be the result of the global ultra-rich looking to diversify their portfolios in property, attracted by the excellent value for money found in South Africa.
According to PGP, foreign buyers make up 3 % of the total, with the majority being from the UK, Germany, Portugal, Belgium, Switzerland, USA, Zimbabwe, and the Netherlands.
a mega-city, housing a population that is projected to exceed 10 million by 2030.
The Gauteng market seems to be relatively resilient, with suburbs like Sandton, Rosebank, Hyde Park, the“ Parks”, Houghton, Northcliff, Fairways, Midrand, and Soweto showing strong growth.
In Port Elizabeth, suburbs like Mill Park, Walmer, and Summerstrand continues to show good activity. As is the case across the country, properties priced below R3 million moves quickly.
While it’ s impossible to predict what will happen one the next year, a few key trends seem to be emerging. There is a definite demand for sectional title properties within the major growth nodes- particularly for mixed-use precincts that promise to cut down travel time and increase convenience. Estate living is also on the rose, with a growing number of lifestyle estates including more sectional title properties rather than freehold homes. Estates within close proximity to cities remain in high demand, with many offer-
14 DECEMBER 2017 / JANUARY 2018 SA Real Estate Investor Magazine