South African homebuyers make a comeback

Wealthy local and international property buyers are reportedly snapping up homes in Cape Town’s sought-after suburbs of Clifton and Bantry Bay.

According to Dogon Group Properties, despite a slowdown in the property market currently, the group have sold 17 prime properties to the value of over R400 million in Clifton and Bantry Bay on Cape Town’s Atlantic Seaboard.

Nine out of 17 properties were sold to South African buyers some of whom relocated from Gauteng and KwaZulu-Natal to Cape Town.

Foreign buyers included an Indian liquor baron, West African and Asian industrialists, European royalty and Captains of industry from Germany and the United Kingdom.

Two of the 17 properties sold have been sold three times in the past four years.

An apartment in one of the most prestigious blocks on the water’s edge in Clifton sold twice in a two year period, initially for R25 million and later again for R28 million.

Denise Dogon of Dogon Group Properties says both local and foreign buyers of properties in the sought after Nettleton Road and beachfront areas of Clifton still see great value in investing in these locations.

She explains that in good or bad times investing in property is always about the position.

In Clifton, buyers in recent months have paid up to R60 million for a villa while a penthouse was sold for R33 million.

“Buyers are still seeing value in Clifton property and many have been looking to buy in Clifton for years and when the right property comes onto the market, they are quick to respond,” she says.

However, Dogon notes that there are contradictions in the market – on the one hand buyers are looking for bargains in the wake of the global economic slowdown and on the other hand the prices they pay are setting new records for sales in the area.

One example is of a sale in Nettleton Road for R45 million. This is definitely one of the highest prices ever for a piece of land, as the buyer has effectively bought a plot because he intends demolishing the house and building his own, she says.

“In some cases, sellers make profits but and in some, they take less than they paid for the properties in an effort to liquidate assets”.

Dogon says a bungalow on one of the biggest stands on the beach in Clifton, previously marketed for R40 million was recently sold for R26 million and two other bungalows – one for R34 million and the other of R20 million were both sold for the full asking prices.

“South African property still offers excellent value for money and a superior lifestyle when compared to other countries.”

Dogon says Clifton – unlike other suburbs in South Africa was clearly governed by demand and supply principles and that the rare ‘gems’ such as the properties on the ocean and in Nettleton Road achieved top prices irrespective of the state of the rest of the property market.

Top-end properties also seem able to maintain their growth in recessionary times because there is always a shortage of prime properties.

While there are not many buyers in this league, those operating here are very discerning and know what they want.

Sellers are definitely more negotiable as we have been able to work within a band of up to 20 percent discount differential between the listing and selling price, she says.

High income earning property buyers and investors will pay any price as long as the location is right.

According to Seeff Properties, the Atlantic Seaboard and City Bowl locations hold an inherent capital appreciation and even when prices drop, those who buy smart still make money.

Seeff Atlantic Seaboard and City Bowl managing director, Ian Slot says a five-year sales trend analysis reveals that on freehold property sales, Bantry Bay achieved 22 percent and Clifton at 18 percent average annual capital growth over 4.9 yy/mm while Fresnaye achieved 17 percent over 4.8 yy/mm.

Since 2010, 11 homes above R30 million to the total value of R392 414 000 have sold at a capital appreciation of between 10 percent and 18 percent over 4.1 yy/mm and 3.6 yy/mm respectively, he says.

The highest price achieved in 2010 was R60 million for a villa located in Nettleton Road, Clifton, while a villa in Kloof Road, Clifton sold for R45 million this year.

Slot says without a doubt, location still sells. As an example, he says a four bedroom villa in Ave Disandt in Fresnaye was recently sold for R11.5 million within three days of listing it.

Seeff estate agents say location remains a drawcard for Camps Bay buyers.

In Mouille Point, agents report that buyers are prepared to pay between 10 and 15 percent more for sea-front properties such as a one bedroom unit in Fortuna sold in September for R1.75 million.

In Sea Point, the good location buys are without a doubt the beachfront properties where a total of 17 units have sold in Beach Road to the value of R73.06 million, according to Seeff estate agents.

Pam Golding Properties (PGP) recently sold a luxurious family home in Bishopscourt for R35 million.

The property located on Klaassens Road was purchased by a South African buyer drawn to its expansive entertainment areas, privacy and security as well as its generous accommodation.

PGP’s area manager for the Southern Suburbs, Howard Markham, says the sellers demolished an existing older house on the property in the early 2000s, creating the space to build their dream family home.

Markham says the location in the southern quadrant of Bishopscourt, bordering the Constantia Valley, offers some of the suburb’s best views.

The entire suburb of Bishopscourt is known for its large family homes on extensive grounds and it is only fitting that properties in this location regularly fetch well above R20 million.

“This particular sale was a cash deal concluded with a local buyer, confirming our experience that there is still demand from South Africans for top-end executive homes in the best suburbs, regardless of current economic conditions,” he adds. – Denise Mhlanga

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While each home buyer will have their own criteria as to what their home must have based on their life stage and personal preference, there are a few key elements that home buyer’s in the current market seem to agree on, RE/MAX of Southern Africa.

The right price

According to RE/MAX the first thing that the majority home buyers must have is an affordable price tag, especially first-time home buyers because they often don’t have the equity from selling a property to roll into the next purchase. Although aspects such as space and the aesthetic appeal of the home are important, for most part the financial elements and affordability are top priorities.

“It is important for buyers to have a budget and make sure they stick with what they can afford. Buyers shouldn’t overextend themselves in the current market as it is highly likely that if they do, they will experience financial pressure in the foreseeable future. With house prices decreasing over the past few years, as well as the current low interest rates, properties that were previously unaffordable to many home buyers are now within reach. This has significantly opened up the market to buyers who now have more options available to them while still managing to stay within their budget limitations,” says RE/MAX.

A home that meets future needs

RE/MAX says that although it is impossible to know what the next ten years may hold, the reality is that many home buyers will be in their home for longer than they think. It will pay off to purchase a home that doesn’t just meet the criteria now, but also in the next five to ten years.

“Property is a long term investment. A must-have now may not be one in a few years, so home buyers should look at property and ask if they can see themselves staying there for a while and what the future looks like. Is marriage on the cards or perhaps children?  If so, then an extra bedroom would probably be of higher importance than granite counter tops.

A prime location

It might be an old cliché but there is certainly a lot of truth to the location, location, location adage. This mantra rings true for home buyers in any market; location will always be high on the must-have list. Whether it is a question of lifestyle or good return on investment, buying a property in the right location will be one of the most important decisions a buyer can make.

RE/MAX notes that vital aspects to consider when deciding on a location would be:

Proximity to your place of work.

• A location convenient to local amenities such as medical facilities and shopping centers.
• A neighborhood / estate or complex that is well-maintained and is aesthetically pleasing.
• Buyers with children or plans for a family should look at the quality of schools in the area.

“Try to find an area that is established and has a history of solid returns that have been stable over the long term. Look for areas that have kerb appeal that are well maintained and where there are more owners than tenants, as owners will predominately want to protect their investment by keeping the area well looked after.

A house that has been properly maintained

Buying a house that has been properly maintained by the previous owner can help alleviate a large number of costs in the future. He says, “With the introduction of the Consumer Protection Act many buyers are insisting on the list of defects that the act prescribes, even though legally it may not be applicable. It is important for them to know that they are purchasing a property that is in good repair.”

While a quick run through and spot check of the home can help buyers sift through their options and narrow down the property they would most like to purchase, it is best to have a professional inspector undertake a thorough check and advise accordingly.

Contemporary updates in key areas

Although the property may not be completely renovated, there are certain areas of a home that buyers place a higher priority on, says Goslett. This is because there are some rooms in a home where renovations will add more value in terms of resale at a later stage.

For example, kitchens and bathrooms are known to get sellers the best boost in value, with many sellers recouping as much as 80% of their renovation costs on a kitchen and between 65% and 75% of the costs of remodeling a full bathroom. “These two areas of a home are the most important to buyers when looking at prospective houses. If they have been renovated or simply updated by the previous owner, it will have a big impact on the overall appeal of the home.

Goslett concludes by saying that given the fast options available to buyers in the current market, sellers should take these must-haves into consideration when wanting to successfully sell their property in the shortest possible time.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

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