Quality residential investments
Take advantage of positive market conditions and reap the rewards later, is the advice. Where are the best performing developments and locations in 2020?
WORDS: KIM MAXWELL • IMAGES: SUPPLIED
ales of residential property may have endured a few hiccups during 2020, but the category seems to be weathering the storm. The general market sentiment is that low interest rates are too good an opportunity to pass on. Property investors and homeowners are buying into quality developments now to benefit when the market recovers.
“The recent resurgence in market activity is fuelled by an substantially lower interest rate, lower prices in some affluent suburbs and lower transfer duties,” says FNB senior economist Siphamandla Mkhwanazi. While there may still be uncertainty about the lasting impact of the pandemic, a historically low interest rate and lower transfer duties, particularly in the mid-priced sector, are a big incentive. FNB’s prediction is that current levels of buyer activity should continue in the short term.
Pam Golding Property group chief executive Andrew Golding says there’s a marked trend towards buying in gated communities. “In fact, residential estate living has been attracting interest for many years.”
The best performing developments are ones that offer residents a convenient, holistic lifestyle,” says Rabie Property Developers director Miguel Rodrigues. “Great security and nearby facilities have become important factors in buyers’ decision-making processes.
“You could buy in an urban neighbourhood with no security assurance, where you might not even be able to walk outside safely. Or you could buy an apartment in say, Century City, where the precinct is pristinely managed and has a central security system and team at work 24/7. Plus you’d have shops, restaurants and offices on your doorstep.”
Rabie’s Bridgewater One apartments, currently under construction in this precinct, appeal to buyers looking for this type of lifestyle offering in a fairly central Cape Town location. More than 85% of units have sold since November last year.
Steyn City marketing and events group head Zoe van Onselen says the lockdown introduced a greater emphasis on security and lifestyle for property owners and investors.
“Although buyers still favour the convenience of city living, there’s a shift to less density – ideally with the presence of a green lung and space to breathe. They still want to be able to do it all but new work-from-home conditions mean they’re no longer bound to an address close to their work premises.”
Despite what the data says, she believes the move away from city living post-Covid-19 could be permanent. “This is an interesting trend because at present, 55% of the world’s population lives in cities and forecasts suggest that figure will be closer to 70% by 2050, across both developed and developing nations.”
As the largest residential estate in the country, Steyn City certainly ticks the boxes as a “top performer”.
“Although the South African property market has shown a downturn, Steyn City stands out for resisting this trend,” says Van Onselen. “We’re in front when it comes to retaining and growing investment value at the high end. It’s a sound investment, regardless of economic conditions – and this is what buyers are looking for. Purchasers who bought at the time of our launch are already seeing a return on their investment.”
For sectional title developer Balwin Properties, creating a pipeline of certified green homes is attracting apartment buyers looking for sustainable home features at an affordable price. Balwin and Absa recently co-created a green mortgage product that offers customers a competitive finance rate. The first Absa Eco Home Loans are now being granted.
Qualifying buyers will benefit from a reduced interest rate on their mortgages for homes with green Edge certification at Balwin Properties’ Gauteng residential estates The Reid, Polofields and The Blyde, and De Zicht in Cape Town.
In June 2019 Balwin registered 16,000 apartment units with the Green Building Council South Africa’s (GBCSA) Edge certification across seven of its built-to-sell developments as well as three green developments. The homes are clustered around lifestyle centres that achieved the highest six-star GBCSA rating.
With planning, green buildings can be developed at scale without much additional expense. “Extra building costs are minute if you’re an astute developer,” says Balwin Properties CEO Steve Brookes.
“We should strive to get a financial benefit for our customers. And I’m passionate about green buildings. We’re also keeping the architects on their toes,” adds Brookes. “They need to put their energy into making a better living environment.”
Kent Gush describes 2020 as a challenging property space for high-end luxury apartments but says a significant drop in the interest rate has been a game-changer.
“It’s almost cheaper to buy than to rent at the moment. If you’d told me at the beginning of the lockdown that we’d be enjoying these sorts of good residential sales now, I never would have believed you,” he says. “At 7%, this is the lowest rate in decades. That’s the fundamental driver of the market, in my opinion.”
Luxury apartments at Ellipse Waterfall start from R1,6m and penthouses sell in the R14m to R20m range. “The end user is saying, ‘I’d rather buy than rent’. The savvy investor is saying, ‘For the first time I’m getting yields of 8.5% to 9%-plus, which hasn’t been seen for some time’. Suddenly the yields are looking very attractive.”
It’s also about location, says Gush. “If you look at the quality of the build and other factors, many investors believe this mixed-use Waterfall precinct is the new growth hub in Gauteng. Developers are pinning their hopes on good capital growth, with Waterfall as the new Sandton.”
With 34 sales valued at almost R50m at Olive Place since the March 2019 release to market, developer Multi Spectrum Properties (MSP) appears to be doing something right. Olive Place is part of Klipfontein Farm lifestyle estate in Malmesbury. It offers rural homes at an accessible price point, appealing especially to young professionals who have flexible work routines.
A new Olive Place starter home with two bedrooms, one bathroom and a carport is priced from R1,049,900. “The monthly repayments are lower than many rental options available and will see you owning a home in a family-friendly, perimeter walled and access-controlled estate,” says MSP project liaison manager Werner Scheffer.
“Olive Place brings a completely new option for family living to Malmesbury –literally a breath of fresh air. Some residents work in Cape Town and many remark on what a pleasure it is to commute from Malmesbury instead of sitting in traffic in the city,” says MSP estate agent Arno van der Merwe. “It feels like living on a farm, without the risks. The tranquil atmosphere and the fact that you can go for walks in the countryside are a great plus.”
Successful residential developments of the future will be those offering flexibility and a mix of price points. Rodrigues says it’s not just about the inside of your home – your broader environment will count too. That’s why Rabie’s residential developments all appeal to multigenerational and multi-income residents.
For instance, Burgundy Estate north of Cape Town has three schools, a convenience shopping centre and a restaurant. Although it’s not a gated precinct, each complex within the estate is separately secured, with central estate patrols. Homes range from single-level townhouses for families to low-rise apartments and erven with standalone homes.
“You can buy an apartment at R995,000 or a standalone home at R3,2m, in addition to a variety of rental options,” says Rodrigues. “Our most recent development, Hazelwood, consists of low-rise apartments, a communal swimming pool and a clubhouse, with manned security.” The units are sold out.