Lew Geffen – R3.5 Billion worth of Atlantic Seaboard property sold this year

R3.5 billion worth of Atlantic seaboard property sold this year

He says buyers are willing to pay up to R100 000/m² for homes in the exclusive coastline hugging suburbs, whereas R30 000/m² is the upper limit for even the most select homes in Johannesburg, which is South Africa’s second richest market.

From January to the end of October this year, sectional title sales along the 18km stretch of coastline from the V&A Waterfront to Llandudno amounted to R1.774bn rand. House sales accounted for another R1.729bn, bringing the total value of property sales for the period to R3.503bn.

And Geffen expects the extremely buoyant market to continue in 2015.

“The value of property on the Atlantic seaboard has risen by 30 percent in the past five years and I don’t see the bubble bursting for at least another three. The Atlantic seaboard is very much at odds with the rest of SA in that the market is far less dependent on interest rate fluctuations. In our experience more than 80 percent of sales are cash deals rather than bonded homes,” says Geffen.

“The only thing that could derail the upward trajectory of the property market there in the medium term would be a drastic national economic downturn such as the country formally moving into a recession.”

Geffen says the biggest challenge facing estate agents is a severe lack of sale stock, because every agent in this area has a waiting list of buyers.

“A large percentage of sale properties under R4 million don’t ever make it to market,” says Geffen. “Agents simply call their buyers’ lists and nine times out of 10 the sale happens within a day. If you’re house hunting in that price bracket the smart thing to do is to contact agents and give them your details, otherwise you’re unlikely to know about half the properties that actually go up for sale.”

Geffen says a slew of developments planned for Sea Point Main Road and the surrounding blocks will drive up demand and residential prices in the suburb even further in the next few years.

“Because there is effectively no more development land in Sea Point, a number of the older, small blocks along Main Road are being bought by developers,” he says.

“One developer will buy three or even four neighbouring blocks with plans to modernise and extend the buildings. It’s likely that within five to 10 years most of the little shops that are the hallmark of Main Road at the moment will disappear, and make way for large mixed-use developments with retail and residential components. That land is simply too valuable to stay as it is.”

Geffen says although one-bedroom flats are still to be found in Sea Point for around R1.5m, the biggest money is undoubtedly being spent in Clifton and the Waterfront.

“Last year properties on the Waterfront yacht basin were selling for around R70 000/m² and we considered those prices to be high, but this year two were sold for more than R90 000/m² and a few more for over R80 000/m².

“In the Waterfront a one-bedroom flat can cost more than R6m, but in Clifton you could pay up to R12m or even R13m depending on the size and location,” he says.

This year the sectional title property sold for the highest price a square metre in Clifton was a three-bedroom flat that was sold for R18m – more than R103 000/m². Clifton alone accounted for more than R400m in property sales in the recorded period, with the single highest transaction price being R70m.

Geffen says much of the value of property in Clifton, and the Atlantic seaboard as a whole, is derived from the investment value of the area as a tourist destination.

“I would estimate that about 30 percent of properties in Clifton are owner-occupied full time. The rest are investment properties that are used as holiday homes by owners and rented out on short lets when they’re not in residence.

“Prime beachfront homes and the large hillside houses in Clifton can achieve rental rates of up to R90 000 a day in peak season, but the average is around R30 000 a day. That is a substantial return on investment for owners over a few years.”

Geffen says there is no doubt that the Atlantic seaboard will remain an attractive property investment location for buyers in the coming year, with sales numbers likely to top those of 2014 if there is sufficient stock to sell.

“There is no reason for sellers to wait for the market to rise if they are upgrading as the property they buy will also be more expensive on a proportionally higher scale – all markets are relative to one another. Especially if you want to get your foot in the door in the lower end of the market there really isn’t time to wait because a year from now, that rung of the ladder will be out of reach.”

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Lew Geffen – Property Market Cooling Down

PROPERTY MARKET COOLING DOWN

LEW GEFFEN SOTHEBY’S INTERNATIONAL REALTY: Property market cooling down. The exuberance that was evident in the property market a year ago is coming to an end, and home sellers in most parts of South Africa now need to moderate their price expectations accordingly.”Sellers need to calm down and price their properties fairly in order to achieve a sale, bearing in mind that further interest rate rises are anticipated.”That`s the advice of Lew Geffen, chairman of Sotheby`s International Realty in South Africa, who says although summer is here and the prime home-buying season is picking up momentum, the heat has gone out of the market in the past few months and the rate of price growth is slowing down.”Since 2012, when the market really began to turn after the 2008 and 2009 recession, we have seen the average home sale price in our group rise by around 26%, and at this level we are seeing indications of buyer resistance in most of the country except Cape Town where demand is still very high.”Geffen says he is aware that his point of view may be at odds with what some other high-pro-file commentators may be saying about the state of the real estate market, but the fact is that there has been a weakening of consumer sentiment this year.”And at the same time the banks are still extremely conservative when valuing properties for home loan purposes.”In short, we are back in a normal market that is in the process of balancing itself, and this will soon be the case in Cape Town too. “Geffen says, however, that prospective buyers should not be sitting on the fence at this stage and waiting for prices to go down.”I want to be clear: Home prices are now back where they were before the `bust` of 2008, and are set to keep rising, although possibly more slowly for the next couple of years.”<lew_geffen_sothebys_northern_cape_express.lew_geffen.ornico>

NORTHERN CAPE EXPRESS  10 Nov 2014

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Lew Geffen – Southern Suburbs is a Seller’s Market

Stock shortage sale means Cape Town’s Southern Suburbs is a sellers’ market

A shortage of quality stock in the Southern Suburbs of Cape Town has turned the entire area into a sellers market with the only properties not selling within a month or two of being listed typically being overvalued or over-priced.

Lew Geffen, chairman of Lew Geffen Sothebys International Realty says, This has created a situation where one or two record prices have been achieved in many of the suburbs in the past eight months, and in situations where more than one buyer were competing for a reasonably priced property, the asking price has occasionally been slightly exceeded.

Arnold Maritz, the Lew Geffen Sotheby’s International Realty principal for the area explains the effect this stock shortage is having on property prices in the Southern Suburbs saying, The normal market rules of supply and demand apply in that when there is higher demand for property than supply (more Buyers than Sellers), the prices should increase faster than when this is not the case. This is however being counter balanced by the conservative approach of the banks when they request valuations prior to granting bonds.

Maritz says, The net effect is that prices are not increasing in leaps and bounds, but rather that reasonably priced properties are selling faster than they would have 2 or 3 years ago. Over-priced properties still remain on the market for long periods of time. Buyers are typically cautious, and complete a careful due-diligence process before committing to spend their hard-earned money.

Geffen adds, Affordability remains an issue, and if property prices increase significantly faster than salaries and wages, less and less people will be able to buy, and demand will taper off. The consequences of the 2008 “ 2009 recession are still very fresh in our collective memory.

Says Maritz, This situation has been developing for the last eight months or so, and is effecting all the areas that traditionally fall within the Southern Suburbs. There are however some areas being affected more severely than others “ there are for example far fewer properties for sale in Plumstead and Pinelands than in Constantia.

According to Maritz the stock shortage has come about as a result of three main reasons. The first one is that many developers withdrew from the market just after 2008, and consequently there have been very few new properties coming to the market for sale. The developers are returning to the market, but their projects have a lag time before being available to live in, and so demand has grown faster than new developments have been able to get off the ground.

Maritz attributes the second cause of the stock shortage to what he says is, More a ˜feeling than a scientific fact, adding that generally people are feeling less ˜bullish and confident about the growth rate of the economy, and consequently are more careful about entering into property transactions, which involve high transaction costs which include agent fees, transfer duty taxes, legal fees and potential Capital Gains Tax. As a result Maritz says, They thus sell less frequently, and possibly rather upgrade and hold on to what they have for longer.

Close behind the second reason comes the third, which according to Maritz is Almost creating an artificial shortage of ˜For Sale properties when people who have decided to sell realise that there is not much stock to choose from when it comes to buying, so instead of first selling their property, and entering the market as ˜cash Buyers, they decide to first look and find something to buy, before they start the sale process of their property.

Maritz points out that this Understandably conservative approach further reduces the count of houses for sale on the market at any given time, while increasing the number of people looking for a house to buy, and thus contributing towards the current imbalance.

As to whether these reasons are causing a situation where people to pay more for properties than usual, Maritz says, The growth in property prices are not far higher than inflation at the moment, so people are not having to pay more than usual. He adds, In 2004, property prices in the Western Cape increased by 34% in one year “ that is more than usual. The current growth rate of 6 to 8% is probably far more sustainable.

Article by: www.irvinebartlett.co.za

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