Keep a Cool Head in the Face of a Multiple Offer Battle

Keep a cool head in the heat of a multiple-offer battle

PROPERTY NEWS – Even though there has been much more activity in the property market lately, prospective buyers are extremely value conscious and are virtually ignoring any home they think is overpriced, while zeroing in fiercely on those properties they think are correctly priced.
“In fact,” says Lew Geffen, chairman of Sotheby’s International realty in SA, “their attention is so focused that the sellers of well-priced homes are once again starting to receive multiple offers to purchase – a market phenomenon that has not been in evidence for the past five or six years.
“And of course this is a good scenario for serious sellers. The banks are still being very careful about granting home loans, and it is great to have a ‘back-up’ offer in hand if the first buyer’s bond application should fail. It is also useful if the first buyer’s offer was subject to the sale of an existing home and that sale does not materialise in the time allowed.”

However, he says, a multiple offer situation can be stressful for prospective buyers, so there are a few things they need to remember, the most important being that it is not always the first or the highest offer that is accepted.

“There are always two things that matter to a seller – price and terms – and both are open to negotiation. If, for example, the sellers have received a higher offer that is subject to the buyers being able to sell their own home, they might well accept a lower offer that is non-contingent, depending on how quickly they themselves would like to move.
“Speaking of which, a particular seller may also have a special need – perhaps a really quick exit so he or she can start a new job elsewhere without having to worry about a lot of small repairs, or perhaps a need to stay in the home until a school term finishes – and buyers who are willing to be flexible on such points can often cinch the deal without having to offer the highest price.”
But in the current market, Geffen says, the offer most likely to appeal to sellers is one that comes from a buyer who has taken the time to obtain proper home loan pre-approval (not just pre-qualification) and has cash in hand to meet any deposit requirements and the purchase closing costs, such as transfer duty, bond registration costs and legal fees.
On a cautionary note, he also says buyers should take care not to get carried away in the heat of a competitive situation and increase the amount of their offer without giving it some serious thought. “Bearing in mind that the banks are still valuing properties very conservatively, they might not obtain a home loan for a higher amount, even if they can afford it.
“And on the other hand, increasing the price offered could affect the buyers’ ability to pay the deposit and transfer costs, and could also result in higher monthly loan repayments that could have a long-term effect on their lifestyle.”
Issued by Sotheby’s International Realty

Steep Rise in the price of Cape Town Residential Property

Steep rise in the price of central Cape Town properties

Residential property prices in Cape Town’s central city have risen fairly steeply this year, with around 190 sales generating more than R310 million for sellers in a far more vigorous investment market.

From January to November last year 165 properties worth around R233m changed hands in a slightly slower market.

Last year the average sale price of residences in the CBD was R1.415m, according to Western Cape Estate Agents Institute property sales aggregation website Propstats.

“This year the average price has risen to R1.664m, showing a healthy return on investment for buyers who saw the potential in the central city’s vibrant residential opportunities even when there was previously a surplus of stock,” says Lew Geffen, the chairman of Lew Geffen Sotheby’s International Realty.

The latest figures provided by Cape Town’s Central City Improvement District (CCID) show that the value of property in the CBD increased overall from more than R6.127 billion in the 2005/06 financial year to R23.692bn in the 2013/14 financial year.

The CCID supports Geffen in its view that the strong recovery of the residential sector is evidenced by sales having doubled from a total of R115m in 2011 to R249m for the whole of 2013.

“The fact is that we haven’t seen any large-scale residential developments in the CBD for several years now, so there is huge demand for the property that is available,” says Geffen.

“This is clearly illustrated by the fact that a third of properties recorded as sold in October were on the market for less than two weeks, with correctly priced properties moving particularly quickly.”

Properties are also increasingly selling at precisely, or very close to, their listing prices.

“There’s no doubt that we are in a sellers’ market, where demand outstrips supply, particularly in the under R1.5m price range in the city centre. One-bedroom units for under R1m are now the exception rather than the rule, and they can command as much as R2m. This is good news for property owners who wish to sell in the current buoyant market.”

The most expensive sectional title sold recently in the CBD, according to Propstats, was a three-bedroom apartment with 3.5 bathrooms at a sale price of R10m. In the previous year, the highest priced sale was a five-year old two-bedroom apartment that was sold for R4.19m.

But Lew Geffen Sotheby’s International Realty agent Jayson Sprawson says he’s marketing and selling several apartments in the R4m to R10m bracket, which is becoming commonplace in the area.

At the same time, foreign interest in the CBD has probably been at its highest point since 2007, says Sprawson, who has sold several properties to foreign buyers this year.

Sprawson describes the buyers of properties in the CBD as “quite an interesting mix”, with a wide variety of people drawn to the area to invest or to live.

He says: “Most buyers are still middle income earners moving from South Africa’s other major cities such as Johannesburg, Durban or Bloemfontein or buying an investment for their children to live in while studying in Cape Town. There seems to be a definite migration of South Africans to Cape Town at the moment, which is really pushing the demand. Although SA buyers from outside Cape Town are shocked at the soaring prices of CBD prices, they are still investing in fear of missing the proverbial boat.

“It’s not just trendy up-andcomings who you’d imagine would enjoy the buzz of living in the heart of a city. There are families with school-going children, professionals in their 30s and 40s and – according to the CCID’s recent residential survey – a fair sprinkling of senior citizens as well,” he says.

“Many central city flats are also bought as investment properties to rent to long-term tenants, or increasingly for short lets to executives visiting Cape Town for work who choose not to stay in hotels. The shortterm letting market is an investment model that cannot be ignored, with the CBD showing impressive occupancy levels all year round between conference visitors, travelling executives, sports event participants and of course holidaymakers.

“Many of the Atlantic seaboard sectional title schemes don’t allow short term letting which again makes the CBD, De Waterkant and Foreshore developments appealing”

CBD residential properties are generally fairly new conversions or builds and are therefore characterised by a high standard of modern finishes, which commands a premium on the rental market.

Sprawson believes the demand for CBD properties will remain high and prices will continue to rise because there is unlikely to be a massive surge in residential property development in the short term.

“We’ll see a handful of buildings being converted to mixed use with a residential element over the next couple of years. But demand will still outstrip the rate at which developers will be able to supply new properties, which is frustrating for us as agents as we have waiting lists of buyers desperately wanting to get in on the investment action,” says Sprawson.

Geffen says the high purchase rate of properties in the area – with most achieving at least 95 percent of their listing prices – is entirely driven by the growing desirability of the area as a residential zone, because many people want to live within walking distance of work, and also like the idea of 24-hour city life on their doorsteps.

Weekend Argus (Sunday Edition)

http://www.iolproperty.co.za/roller/news/entry/steep_rise_in_the_price

City Apartment’s in Cape Town CBD

Cape Town’s central city residential property market has seen a fairly steep rise in prices this year, with a far more vigorous investment market concluding around 190 sales that generated more than R310 million for sellers.

 This apartment offers two bedrooms, one bathroom, an open plan kitchen and sitting area, and excellent security. It is on the market for R1.375 million – click here to view.

From January to November last year, a slightly slower market saw 165 properties, worth around R233 million, change hands.

According to Propstats, last year the average sale price of residences in the CBD was R1.415 million. Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says this year the average price has risen to R1.664 million, showing a healthy return on investment for savvy buyers who saw the potential in the Central City’s vibrant 24/7 residential opportunities, even when there was previously a surplus of stock.

The latest figures provided by Cape Town’s Central City Improvement District (CCID) show that the value of property in the CBD has risen overall from more than R6.127 billion in the 2005/06 financial year to R23.692 billion in the 2013/14 financial year.

Sales have doubled from a total of R115 million in sales in 2011, to a total of R249 million for the whole of 2013.

 This apartment has two bedrooms, one bathroom, a kitchen, two parking spaces, access to a swimming pool and 24-hour security. It is priced at R2.375 million – click here to view.

Geffen says the fact is that they haven’t seen any large scale residential developments in the CBD for several years now, so there is huge demand for the property that is available.

He says this is clearly illustrated by the fact that a third of properties recorded as sold in October this year were on the market for less than two weeks, with correctly priced properties moving particularly quickly.

Properties are also increasingly selling at precisely or close to their asking prices.

“There’s no doubt that we are in a sellers’ market, where demand outstrips supply, particularly in the under R1.5 million price range in the City Centre.” One bedroom units for under R1 million are now the exception rather than the rule, and they can command as much as R2 million, he says.

Geffen says this is definitely good news for property owners who wish to sell in the current buoyant market.

According to Propstats, the most expensive sectional title sold recently in the CBD was a three bedroom apartment with three and a half bathrooms, which achieved a sale price of R10 million. In the previous year, the highest priced sale was a five-year-old two bedroom apartment that sold for R4.19 million.

 This apartment has one bedroom, one bathroom, a lounge, access to a swimming pool, a fully equipped gym and 24-hour security. It is priced at R1.85 million – click here to view.

Lew Geffen Sotheby’s International Realty CBD property expert, Jayson Sprawson, says currently on the market are several exclusive apartments in the R4 million to R10 million bracket, which are becoming commonplace in the area.

At the same time, foreign interest in the CBD has probably been at its highest point since 2007, he says.

Sprawson describes the property buyers in the CBD as ‘quite an interesting mix’, with a wide variety of people drawn to the area to invest or to live.

The vast majority of buyers are middle class, relocating from South Africa’s other major cities such as Johannesburg, Durban andBloemfontein, or buying an investment for their children to live in while studying in Cape Town, he says. There seems to be a migration of South Africans to Cape Town at the moment, which is pushing demand. “While South African buyers from outside of Cape Town are shocked at the soaring prices of Cape Town CBD prices, they are still investing in fear of missing the proverbial boat.”

Sprawson says it’s not just young, trendy up-and-coming individuals who you’d imagine would enjoy the buzz of living in the heart of a city. He says there are families with school-going children, professionals in their 30s and 40s and, according to the CCID’s recent Residential Survey, a fair sprinkling of senior citizens as well.

Sprawson says many central city flats are also bought as investment properties to rent to long-term tenants, or increasingly for short-term letting to executives visiting Cape Town for work who choose not to stay in hotels. He says the short-term letting market is an investment model which cannot be ignored, with the CBD showing impressive occupancy levels all year round between conference visitors, traveling executives, sports event participants and holidaymakers. Many of the Atlantic Seaboard sectional title schemes don’t allow short-term letting, which again makes the CBD, De Waterkant and Foreshore developments so appealing, he says.

CBD residential properties consist of generally fairly new conversions or builds and are therefore characterised by a high standard of modern finishes,  commanding a premium on the rental market.

Sprawson believes that the demand for CBD property will remain high and prices will continue to rise because there is unlikely to be a massive surge in residential property development in the short term.

“We’ll see a handful of buildings being converted to mixed-use with a residential element over the next couple of years, but demand will still outstrip the rate at which developers will be able to supply new properties, which is frustrating for us as agents, as we are literally sitting with waiting lists of buyers desperately wanting to get in on the investment action.”

Geffen says the high purchase rate that the properties in the area are experiencing, with most achieving at least 95 percent of their asking price, is entirely driven by the growing desirability of the area as a residential zone, because many people want to live within walking distance of work, and also like the idea of a 24-hour city life on their doorstep.

Courtesy of Property 24  on 23 Dec 2014

Crazy Atlantic Seaboard Prices Boom

Property worth R3.5 billion was sold on Cape Town’s Atlantic Seaboard in the first 10 months of 2014, making it by far the most expensive real estate in South Africa.

 This striking and unique villa in Camps Bay is on the market for R49m. It is artfully designed with a North facing aspect, suspended over the ocean with unsurpassable amazing sea and mountain views – merging technology with natural beauty. Distinctive features include 6 bedrooms en suite with secluded balconies. Click here here to view.

That’s according to Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, who says buyers are willing to pay up to R100 000 per square metre for homes in the exclusive coastline-hugging suburbs, whereas R30 000 per square metre is the upper limit for even the most select homes in Johannesburg, which is South Africa’ssecond richest market.

From January to the end of October this year, sectional title sales along the 18 kilometre stretch of coastline from the Waterfront to Llandudnoamounted to R1.774 billion rand. House sales accounted for another R1.729 billion, bringing the total value of property sales for the period to R3.503 billion.

And Geffen says they expect the extremely buoyant market to continue in 2015.

“The value of property on the Atlantic Seaboard has risen 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 South Africa in that the market is far less dependent on interest rate fluctuations. In their 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, he says.

Geffen says the biggest challenge facing realtors is a severe lack of sale stock, because every agent in this area is sitting with what effectively boils down to waiting lists of buyers.

 This appealing contemporary family home in Camps Bay offers an emphasis on space and outdoor flow with a child friendly garden and pool is in the market for R14.9 million. It is perfectly positioned in quiet cul de sac within walking distance to beachfront and all amenities. It comprises four en suite bedrooms, and a master suite with private lounge and jacuzzi terrace. Click here to view.

“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.”

He says 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, we’re starting to see a number of the older, small blocks along Main Road being bought by developers,” he says.

One developer will buy three or even four neighbouring blocks with plans to modernise and extend the buildings, he says.

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, he says. “That land is simply too valuable to stay as it is.”

Geffen says that while 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 we were seeing properties selling on the yacht basin in the Waterfront for around R70 000 per square metre and we considered those prices to be high, but this year two sold for more than R90 000 per square metre and a few more for in excess of R80 000 per square metre.

In the Waterfront a one-bedroom flat can set you back more than R6 million, but in Clifton you could pay up to R12 million – or even R13 million depending on the size and location, he says.

 Situated close to the beach, this townhouse overlooking beautiful landscaped gardens is in the market for R8.995 million. It offers ample spacious accommodation and living areas that flow effortlessly to the sun-drenched patio and pool area.It offers a separate study, well-fitted open plan kitchen three bedrooms, main en suite with patio and double garages in an secure complex. Click here to view.

This year the sectional title property that achieved the highest price per square metre in Clifton was a three-bedroom flat that sold for R18 million, at more than R103 000 per square metre. The suburb of Clifton alone accounted for more than R400 million in property sales in the recorded period, with the single highest transaction price being R70 million.

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

He says he would estimate that about 30 percent of properties in Clifton are owner-occupied full-time. The remainder 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 villas 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 presents a substantial return on investment to owners over a few years, he says.

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.

“I’ve said it every year for the past five years and I’ll say it again now; prices on the Atlantic Seaboard will categorically not be going down.

He says if people are considering buying in the area, the time is now, because next year property prices will be higher, and even higher the year after that.

There is no reason for sellers to wait for the market to rise if they are upgrading, he says, as the property being acquired will also be more expensive on a proportionally higher scale – all markets are relative to one another.

“Especially if you’re looking 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 forever.”

As per Property 24 30 Dec 2014