V & A Waterfront Achieved Record Residential Property Prices Last Year

The V&A Waterfront’s Front Yacht Basin boasts the second most expensive real estate per square metre in South Africa – second only to Clifton – with record prices in the precinct last year reaching close to R100 000 per m².

Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says much of the property bought on the Front Yacht Basin is for investment purposes rather than permanent residence.

“Life in the V&A Waterfront is the ultimate in lock-up-and-go, unrivalled anywhere else in the country from a convenience point of view,” says Geffen.

The luxurious apartment blocks and penthouses with their ultra-tight security that make up the Front Yacht Basin are sandwiched between the deluxe One & Only and Cape Grace hotels, and are just a short walk away from Africa’s shopping, entertainment and dining mecca.

The Waterfront precinct is the most visited attraction in Africa – drawing more footfall than the Pyramids of Giza – with some 24 million visitors last year alone, according to official V&A Waterfront figures.

“The V&A Waterfront added R198 billion to South Africa’s GDP over a ten year period (from 2002 to 2012),” according to CEO David Green.

He says proximity to the Waterfront also added an additional 23% value to residential properties that fall within a 1.5km radius of this prime location over the same period.

Lew Geffen Sotheby’s International Realty Atlantic Seaboard CEO Brendan Miller says that properties on the Front Yacht Basin tend to average between R80 000 and R85 000 per m², while Canal properties average between R55 000 and R65 000 per m².

“The Front Yacht Basin may be the most desirable location in the Waterfront, but the Canal properties present exceptional value for money and buyers have found them to be an extremely strategic investment,” says Miller.

According to Propstats.co.za the combined Canal and Front Yacht Basin apartment market in 2014 was 48 sales worth more than R512 million.

Propstats figures show that 13 Front Yacht Basin apartments changed hands to the value of more than R280 million, at an average sale price of R21,569,231.

Geffen says some of the biggest money on the Atlantic Seaboard is undoubtedly being spent on property in the Waterfront. “Wealthy Gauteng residents are buying more holiday homes in Cape Town’s V&A Waterfront, generally on the Canals, and some are even choosing to live there permanently and commute for business.

“During 2007 the average price for an apartment on the Canal was R5. 84m at R40 300 per square metre.

“Buying residential property here is clearly a watertight investment that outstrips inflation.”

The highest price paid for a single residence in the Waterfront in 2014 was a penthouse on the Front Yacht Basin sold by Lew Geffen Sotheby’s International Realty that changed hands for R38.5m at R78 411 per square metre.

Miller says the Front Yacht Basin is extremely attractive to the international market, both from a location and value point of view.

“There simply isn’t a more secure lock-up-and-go location anywhere and the surrounding amenities are world class, which is what international travellers want when they stay in Cape Town.

“When not in use by the owners, many of these apartments are also made available for short term lets, which brings in substantial income for owners because these apartments attract high rentals and tend to be busy for most of the year.”

Says Geffen: “In 2013 properties on the Waterfront yacht basin were selling for around R70 000 per m² and we considered those prices to be high, but in 2014 two were sold for more than R90 000 per m² and a few more for over R80 000 per m². In the Waterfront a one-bedroom flat can cost more than R6m.”

The V&A’s convenience comes from being able to be on the N1 or N2 within five minutes and from being able to walk to Cape Town’s most exclusive shopping experience along secure, picturesque pathways.

“Property within the V&A Waterfront will never drop in value because by virtue of the location there is limited residential development space,” says Geffen.

“The scarcity of residential property there is not going to change because of development space limitations, so there’s always going to be greater demand than supply,” adds Geffen.

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

Article by: Lew Geffen Sotheby’s

Average Return on Investment in Cape Town City Bowl Property

The city bowl is one of the most attractive prospects in Cape Town from a living and investment point of view.

Demand for houses in Cape Town’s City Bowl has resulted in the luxury end of the market growing 1 444 percent in rand value and 950 percent in volume in just five years, while house prices in the area overall have shown an average nominal return on investment of 16 percent a year over the same period.

At the same time, the capital return on investment for sectional title units is a staggering 17 percent to 21 percent.

A comprehensive survey of all suburbs in the City Bowl and CBD compiled by Lew Geffen Sotheby’s International Realty shows that since the beginning of 2008 a total of 5 978 houses and apartments have been sold in the area with a combined value of R12.375 billion.

And in the three years since the start of 2012 the sale of 2 720 houses and apartments in the City Bowl and CBD were sold to the value of R6 175bn. The final 2014 totals will still improve since the fourth quarter figures from the deeds office are still to be released.

According to the research 2013 was a record-breaking year with house sales recorded to value of R1.185bn. The year-to-date figure for 2014 of 122 sales worth R884 million indicates that we might see a back-to-back record breaking year again. Bullish sales during the first two quarters of 2014 amounted to R710m. The final 2014 totals will still improve once the fourth quarter figures from the deeds office are released.

The suburbs that make up the City Bowl are Devil’s Peak, Gardens, Higgovale, Oranjezicht, Bo Kaap (also known as Schotschekloof), Tamboerskloof and Vredehoek.

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty says the keen demand for upmarket lifestyle living has been clearly illustrated by the increase of more than 1 000 percent in rand value and volume between 2008 and 2013 in the City Bowl in the luxury sector.

“In 2008 just two properties were sold for over R10m with a combined sales value of R21.5m, which escalated to 21 properties worth R332 051m during 2013.”

He says the demand continued in 2014, with 14 properties in the R10m plus bracket earning R211.3m.

The City Bowl’s most upmarket properties are mainly in Oranjezicht, Gardens, Tamboerskloof and Higgovale.

Brendan Miller, chief executive of Lew Geffen Sotheby’s International Realty Atlantic seaboard, which includes the City Bowl, says as far as the area’s house market for properties pegged at below R10m, the nominal return on investment for houses that were sold during 2013 and the first quarter of 2014 showed on average a 14 percent return a year over seven years.

“All the suburbs showed spectacular returns on investment of which Devil’s Peak at 18 percent, Higgovale at 15 percent and Vredehoek at 14 percent were the highest followed by Tamboerskloof and Oranjezicht at 16 percent and Gardens at 15 percent,” says Miller.

“The City Bowl luxury market segment for properties valued at R10m and over also showed a remarkable average nominal return on investment of 20 percent a year over eight years. The suburbs performing within the upper segment were Higgovale at 24 percent, Oranjezicht at 21 percent, Gardens at 15 percent and Tamboerskloof at 14 percent a year.”

Some outstanding examples of this spectacular performance include a property in Glen Avenue, Higgovale, which was bought in January 2011 for R6.5m and then sold during May 2013 for R16m, showing a return on investment of 48 percent over just two years and three months.

Ryan Greeff, Lew Geffen Sotheby’s International Realty agent for Vredehoek, Oranjezicht and Gardens, cites another example of a home in Bridle Road, Oranjezicht which was bought in January 2004 for R4.1m and sold again during August 2013 for R23.6m, showing a return on investment of 21 percent over nine years.

Finally, a property in Glen Avenue, Gardens, was bought in September 2007 at R8.5m and sold in December 2011 at R26.5m showing a return on investment of 32 percent over four years.

“Even on the assumption that these three properties were bought and renovated before being sold again, the ROI still demonstrates the remarkable investment potential of the City Bowl,” says Miller.

In all the survey shows that the best performing suburbs (as far as the sale of houses is concerned), since 2010, were Gardens at R1.240bn (278 sales), Oranjezicht at R1.033bn (192 sales), Tamboerskloof at R899m (191 sales) and Vredehoek at R798m (262 sales).

In the City Bowl’s sectional title or apartment market the exceptional performance continues with the total rand value of sales between 2008 and 2014 increasing by 54 percent from R723m to R1.112bn. Sales volumes increased by 27 percent from 551 units to 700 units.

According to Greeff, historically the most attractive areas for apartments in the City Bowl have been Gardens, Vredehoek, Tamboerskloof and Oranjezicht.

“In the past year we’ve seen apartments that are correctly priced in these areas selling in less than a month. There is huge demand for stock below R2m and when they come on the market – especially with renovated bathrooms and kitchens – they’re snapped up almost immediately.”

Greeff says one of his biggest problems in the current market is securing sale stock – especially sectional title units.

“The City Bowl is a prime location because of its proximity to the CBD and the public transport access provided by the MyCiti bus routes through the suburbs. This makes it an extremely attractive investment location,” he says.

According to the area research, the top selling areas of the City Bowl for apartments in 2014 were the CBD at R472m (297) Gardens at R205m (119 sales), Vredehoek at R138m (88 sales), Oranjezicht at R89m (55 sales) and Tamboerskloof at R78m (43 sales). This was followed by Devil’s Peak Estate at R26m (12 sales) and Higgovale at R40m (14 sales).

Says Miller: “The average capital ROI for apartments in the City Bowl is exceptionally good, with returns of between 17 percent and 21 percent a year for this area. Devils Peak is at 18 percent, Gardens at 20 percent, Higgovale at 17 percent, Oranjezicht at 20 percent, Tamboerskloof at 20 percent and Vredehoek at 21 percent.”

He says this also affects the rental market, because investors know they will get a high sales return on their properties, and the area is extremely attractive for rentals.

“Our research shows there is substantial demand in the City Bowl area at for Bachelor, one-bedroom, and two-bedroom apartments as well as houses priced between R25 000 and R35 000 a month.

“The monthly rentals in these areas vary substantially depending on a number of factors including size, location, condition, views, security, amenities offered and proximity to schools, entertainment and transport routes, but there’s a shortage of rental stock across all categories.”

Says Geffen: “There’s no doubt that the City Bowl is one of the most attractive investment prospects in Cape Town. It ticks all the boxes from a living and investment point of view.

“Because there is just about no development space left we expect this market to appreciate rapidly in the next few years as Cape Town grows and people value the lifestyle that the City Bowl offers being so close to the CBD and the Atlantic seaboard.”