Cape Town Inner City a Boom Time for Investors

http://www.fin24.com/Wealth-and-Investment/News/Cape-Town-inner-city-a-boom-town-for-investors-20151027

2014 was a record year for residential sales in Cape Town’s CBD, with properties to the value of R856 million changing hands. (Photo: Cape Town Central City Improvement District.)

Cape Town – The central city of Cape Town saw continued residential accommodation sales growth with 682 sales totalling R1.093bn taking place between January 2014 and June 2015.

Brendan Miller, CEO at Lew Geffen Sotheby’s International Realty Atlantic Seaboard, said the growing demand shows no signs of abating after a record year in 2014 when around 530 apartments were sold to the value of R856m. The CBD apartment market last peaked during 2007 with 463 sales to the value of R730m, he said.

“This equates to a very accessible average apartment price of R1.6m at an affordable R20 160m²,” said Miller. “We expect the average price per square metre in the CBD to increase quite dramatically towards the end of next year when several new developments in planning get to the transfer phase.”

“At mid-market level, almost 100 properties priced between R2.5m and R5m sold to the value of R313m and at the upper end of the market 13 sales in the R5m to R10m price band changed hands, with one property at 15 on Orange selling for R13.13m,” he said.

“The exponential growth in the CBD residential market has been spurred by several key factors,” said Miller. “Investor confidence in the growth trajectory of Cape Town’s CBD has inspired a major renewal of the city centre as well as new commercial and residential development, and many commuters are simply no longer prepared to waste time in traffic – even if this means cutting back on living space and sacrificing ‘luxuries’ such as gardens.”

According to the Cape Town Central City Improvement District’s State of the Central City Report 2014, the overall nominal value of all property in the CBD in the 2007/2008 financial year was R5.641bn. In the 2014/2015 financial year, the value had more than quadrupled to R23.724bn.

“This shows just how confident investors are in the future of Cape Town’s CBD, both as a commercial and as a residential centre,” says Miller, who estimates that the residential population has grown to more than 6 000 inhabitants.

“The average nominal percentage return on investment over four years as measured in 2015 is a solid 19% with buildings such as The Adderley realising 21% over five years, Mutual Heights at 23% over four years, Mandela Rhodes Place at 17% over seven years and Cartwright’s Corner reflecting 13% over four years.

“More and more Capetonians are beginning to follow the global trend of trading in their suburban homes for the convenience of city living and we are seeing that correctly priced apartments are, almost without exception, snapped up within four to six weeks of being listed,” said Miller.

“This certainly bodes well for investors looking at entering the CBD residential market as there are still many upgrades and developments in the pipeline, which will increase the demand for accommodation as well as push up the value,” said Lew Geffen, chairperson of Lew Geffen Sotheby’s International Realty.

Cape Town CBD an Investment Hub

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Brendan Miller, CEO at Lew Geffen Sotheby’s International Realty, Atlantic Seaboard, said the growing demand shows no sign of abating after a record year in 2014 when around 530 apartments were sold to the value of R856 million.

“The CBD apartment market last peaked during 2007 with 463 sales to the value of R730 million,” he said.

“This equates to a very accessible average apartment price of R1,6 million at an affordable R20 160 per/m²,” said Miller. “We expect the average price per square metre in the CBD to increase quite dramatically towards the end of next year when several new developments in planning get to the transfer phase.”

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“At mid-market level, almost 100 properties priced between R2,5 million and R5 million sold to the value of R313 million and at the upper end of the market 13 sales in the R5 million to R10 million price band changed hands, with one property at 15 on Orange selling for R13,13m,” he said.

“The exponential growth in the CBD residential market has been spurred by several key factors,” said Miller. “Investor confidence in the growth trajectory of Cape Town’s CBD has inspired a major renewal of the city centre as well as new commercial and residential development, and many commuters are simply no longer prepared to waste time in traffic – even if this means cutting back on living space and sacrificing ‘luxuries’ such as gardens.”

According to the Cape Town Central City Improvement District’s State of the Central City Report 2014, the overall nominal value of all property in the CBD in the 2007/2008 financial year was R5,641 billion. In the 2014/2015 financial year, the value had more than quadrupled to R23,724 billion.

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“This shows just how confident investors are in the future of Cape Town’s CBD, both as a commercial and as a residential centre,” says Miller, who estimates that the residential population has grown to more than 6 000 inhabitants.

“The average nominal percentage return on investment over four years as measured in 2015 is a solid 19% with buildings such as The Adderley realising 21% over five years, Mutual Heights at 23% over four years, Mandela Rhodes Place at 17% over seven years and Cartwright’s Corner reflecting 13% over four years.

“More and more Capetonians are beginning to follow the global trend of trading in their suburban homes for the convenience of city living and we are seeing that correctly priced apartments are, almost without exception, snapped up within four to six weeks of being listed,” said Miller.

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“This certainly bodes well for investors looking at entering the CBD residential market as there are still many upgrades and developments in the pipeline, which will increase the demand for accommodation as well as push up the value,” said Lew Geffen, chairperson of Lew Geffen Sotheby’s International Realty.

Renting out Property? Set the Right Price!

http://www.property24.com/articles/renting-out-property-set-the-right-price/22970

Landlords need to guard against pricing themselves out of the market as rental prices slow in tandem with the movement out of a sellers’ property market.

Dellbridge says the market is currently very buoyant and correctly priced properties are usually let within two to three weeks.

This is according to Lorraine-Marie Dellbridge, rentals manager for Lew Geffen Sotheby’s International Realty in theSouthern Suburbs, Noordhoek and False Bay, who says in 2014 rental rates were already hitting a ceiling, but this year they’ve exploded through roof.

“We are finding that many properties, especially at the upper end of the market, are now sitting empty for months,” she says.

“This essentially means that the landlord is losing money as the property is not earning anything while it is empty, so over a year, it will yield a much smaller return than if the property had been rented out immediately at a realistic, market-related rental.”

Dellbridge says while the goal is to maximise return on investment, the rent should be set at the highest point that will easily attract tenants. She says the best way for landlords to determine a realistic rental price is through research.

“They need to see what is happening in their areas and compare their properties to those that are similar in offering,” she says.

“It’s is also advisable to consult a reputable real estate agency with experienced and knowledgeable agents who can offer up-to-date advice with regards to the ins and outs of the rental arena in their area.”

Dellbridge says just as sales agents are able to appraise properties to help sellers set realistic market prices for their homes, rental agents offer exactly the same service to landlords.

“My advice would be to call in three agents. If two come in at the same price and the third comes in a lot higher, chances are that the two are likely to be correct. But don’t only rely on what they tell you; take their advice in tandem with the research you’ve done about your area and then set the price accordingly,” she says.

“It’ll be clear soon enough if you’ve overpriced the property, because the tenant market will simply not respond, or they’ll respond with lower offers.”

Dellbridge says it’s understandable that landlords want to cover all their property expenses with the rental income, but, it’s not always possible, and this is where research is invaluable. Property rates are higher in certain areas and older properties and homes with gardens usually have higher maintenance costs.

“New investors in the rental market also need to realise that they won’t see an immediate return on investment. It usually takes up to four years before they do start to see returns, and if a property stands empty for a few months the return on investment will be further delayed,” says Dellbridge.

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says landlords should be aware of the fact that nowadays tenants also do their own research and will view many different properties before making a choice, often as many as ten.

“If two properties are the same price and are on a par in general, but one has three bedrooms while the other has five, the tenant will understandably choose the larger home,” he says.

“Similarly, if they can rent a property for R32 000 per month which is just as appealing as the house down the street which costs R40 000, there is no guess work about which property they will apply for.”

Geffen says the rental market has become more like the sales market in that tenants now also negotiate and make offers. Gone are the days when a landlord could be positive of realising the set rental price.

However, Dellbridge says in spite of the growing trend of negotiation in the rental market, some landlords get stuck on an amount and will sometimes not accept a good offer.

For instance, let’s say a property is being marketed at R40 000 per month and an offer of R38 000 is made, but the landlord declines and holds out for the R40 000, which could take a month or even two to realise while the property stands empty.

“Potentially the landlord has then lost two months’ income, which in real terms equates to a loss of R78 000 (at R38 000 per month) for the sake of the R24 000 they would have made that year with the additional R2 000 per month. They can’t recoup that in a year or even two.”

Dellbridge says the market is currently very buoyant and correctly priced properties are usually let within two to three weeks, but it’s not uncommon for overpriced properties to sit vacant for up to four months before an offer is made that the landlord accepts.

There are also other factors which influence the time a property spends on the market, especially in suburban areas.

“We are seeing more and more landlords stipulating that no pets are allowed, and as most families have pets, this definitely makes the landlords’ potential rental pool smaller. This means the property could sit on the market for longer and the owner will lose income,” she says.

“Landlords who are worried about damage pets may cause should keep in mind that they hold security deposits for just such scenarios.”

Other than loss of income, there are also other drawbacks when a property stands empty for some time. Not only is it at risk of being broken into, but squatters can also move in and take possession, and properties tend to degrade when empty.

Geffen says to minimise risk and capitalise on investment it’s prudent for investors to research the general demographic of the areas they are considering and decide which segment of market they’ll be servicing.

“Families will need to be in close proximity to good schools, sports facilities and shopping amenities, while corporate or diplomatic tenants favour an upmarket suburb with easy access to freeways leading to the airport and typically close to business hubs,” he says.

New Development in Befordview from R1.75 million

http://www.property24.com/articles/new-development-in-bedfordview-from-r175m/23007

A luxury, energy-efficient sectional title development set in gorgeous parkland is being launched to market in the exclusive district of St Andrew’s in Bedfordview, the most desirable suburb inJohannesburg’s East Rand.

The townhouses in Milner Grove are priced from R3.86 million to R4.4 million, while apartments in the converted Heritage Home are selling for between R1.75 million and R3.07 million – click here to view.

This is according to Charlene Leibman, Area Specialist for Lew Geffen Sotheby’s International Realty, who says Milner Grove is unlike any other residential development in the area, and offers residents much more than just an upmarket urban estate lifestyle.

“Set on 20 000sqm of tranquil parkland, the emphasis is on creating a serene natural haven where residents can enjoy a relaxed lifestyle in an ultra-secure environment and be lulled to sleep by the soothing sounds of the Jukskei River.”

Currently for sale off plan and due to break ground in early 2016 with completion scheduled for early 2017, Milner Grove offers investors a choice of 18 garden townhouses, as well as five apartments in the iconic, elegant double storey heritage home that anchors the entire development.

The spacious three and four bedroom townhouses all feature private gardens and double garages, with thirteen units also offering staff quarters. Swimming pools and an additional garage are optional extras.

The apartments range from studio to three bedroom units and offer buyers low maintenance urban lock-up and go convenience in a spectacular park setting.

“In an area of diverse property options where investors can spend anything from R700 000 to R30 million, the price point at Milner Grove is very accessible and comfortably positioned at the upper end of the mid-market segment,” says Liebman.

“Set on 20 000sqm of tranquil parkland, the emphasis is on creating a serene natural haven where residents can enjoy a relaxed lifestyle in an ultra-secure environment and be lulled to sleep by the soothing sounds of the Jukskei River,” says Liebman.

The estate in Milner Avenue will be set around the heritage home that housed the Robertson family for many years, and the apartments are a fusion of modern eclectic design and classic echoes of yesteryear.

“The townhouses range from R3.86 million for a 185sqm unit with three bedrooms to R4.4 million for a spacious 220sqm four bedroom home with additional staff quarters. The apartments in the converted Heritage Home are priced between R1.75 million and R3.07 million,” says Liebman.

“The conversion of the elegant homestead into separate apartments was centred on retaining the integrity of the building as well as incorporating the classic features like the beautiful natural stonework and character sash windows.”

She says all the homes will be equipped with Miele gas hobs and ovens and superb quality finishes throughout, with optional upgrades available on request.

“Bedfordview’s property landscape has changed considerably over the past decade, with sectional title units now rivalling the number of single title properties in the area,” says Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty.

“Spurred by substantial investment in the surrounding commercial and industrial nodes, the burgeoning demand and dwindling available land has transformed a once sleepy semi-rural suburb into a well-developed and popular residential area and thriving business centre.”

“Not only does the incorporation of urban greenery and open spaces in residential developments such as Milner Grove increase the aesthetic appeal, it offers residents a respite from the bustle of city life and the developers have set aside a substantial budget for the establishment of the garden and park areas,” says Geffen.

However, he says the growth and prosperity experienced in the area over the past two decades has also resulted in a busy, urbanised suburb with little open land and few remaining green spaces for families to enjoy other than Gilloolly’s Farm.

“Not only does the incorporation of urban greenery and open spaces in residential developments such as Milner Grove increase the aesthetic appeal, it offers residents a respite from the bustle of city life and the developers have set aside a substantial budget for the establishment of the garden and park areas,” says Geffen.

Aside from its excellent location and the convenience of proximity to a selection of first rate shopping malls and entertainment centres as well as easy access to the airport and other business nodes, Bedfordview is becoming increasingly popular with families who are attracted to the top-class facilities and excellent schools in the area.

“Bedfordview boasts several of the top private schools, which are all renowned for their excellent pass rates, and Milner Grove Falls in the catchment areas of Saheti High School, St Andrew’s and King David, as well as into the wider catchment area of St Benedict’s and Reddam House,” says Liebman.

“I have no doubt that an exclusive development with so much green space and green energy will be snapped up extremely quickly, and it wouldn’t surprise me in the least if the entire development is sold out before they even break ground,” says Geffen.

CBD Property Market still booming

http://www.capetownetc.com/blog/news/cape-town-cbd-property-market-still-booming/

 

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cape town cbd

CAPE TOWN CBD PROPERTY MARKET STILL BOOMING

October 29, 2015 by

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Cape Town continues to exhibit a booming residential property market, with the CBD in particular seeing exponential growth in the last year. This is according to Brendan Miller, head of Lew Geffen Sotheby’s International Realty Atlantic Seaboard branch, who spoke to Fin24 earlier this week.

Miller says central Cape Town saw 682 residential property sales between January 2014 and June 2015, totalling around R1.093-billion. The average price of an apartment in the CBD now sits at R1.6-million, but Miller expects that will increase dramatically towards the end of next year when several new developments around the city move from planning to transfer phase.

There are several factors driving property prices continually upwards in Cape Town, says Miller, one of which is investor confidence in the growth trajectory of the CBD. There are also new residential and commercial developments popping up all the time, and commuters are ‘simply no longer prepared to waste time in traffic – even if this means cutting back on living space and sacrificing “luxuries” such as gardens.’ It’s an interesting take on the choices many of us make when deciding where to live. I, for one, would be very happy to give up a garden or a pool if it meant I could get an extra 20 minutes in bed each morning.

cape town cbd

The Cape Cape Town Central City Improvement District’s State of the Central City Report 2014, pegged the overall value of all property in the CBD in 2007/2008 at R5.641-billon. That value has exploded in 2014/2015 to R23.724-billion! Miller says Capetonians are beginning to follow the global trend of handing over the keys to their spacious suburban homes in exchange for the convenience of city living, adding that most properties in the CBD get snapped up by very willing buyers within four to six weeks of going on the market.

So I’d like to say the time is now to buy residential property in the Cape Town CBD, but it almost looks as if that ship has already sailed and we may be too late. Miller says the only way is up for the CBD, and with the City of Cape Town continually planning upgrades and improvements I can’t help but agree. Time to carpe thatdiem?

Read the full article on Fin24 here.

Photography courtesy HSMImages.co.za

– See more at: http://www.capetownetc.com/blog/news/cape-town-cbd-property-market-still-booming/#sthash.6JmDaY28.dpuf