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.”