Pic Credit: ELLIPSE WATERFALL IN MIDRAND, JOBURG
WORDS: HELÉNE MEISSENHEIMER IMAGES: SUPPLIED
There’s no denying that South Africa faces immense challenges to rebuild its economy following the devastating effects of the coronavirus crisis. There are, however, many investors and first-time homebuyers who believe the country still offers excellent value in the luxury property market. South Africa has the largest wealth market on the continent and the 32nd largest worldwide in terms of total wealth held. This is according to the SA Wealth Report 2020, New World Wealth’s latest annual report released at the end of April. It also states that, based on the wealth statistics available in December, about 38,400 millionaires (high net-worth individuals, or HNWIs) were living in the country at the time.
Most of these HNWIs live or own property in the country’s “Big Four”, namely Joburg, Cape Town, the Boland towns of Paarl, Franschhoek and Stellenbosch in the Cape Winelands, and Durban and Umhlanga in KwaZulu-Natal. South Africa was already in a technical recession before the Covid-19 pandemic hit. For more than a year now, sales in the higher-end residential property market have been slowing down as many investors adopted a wait-and-see approach. The nationwide lockdown from the end of March brought the property market almost to a standstill, so it’s quite surprising – and most promising – to note that property leaders and developers report continued activity in pockets of the luxury residential market.
“There are more buyers out there than one may expect,” says Fine & Country SA CEO Linda Erasmus. According to her, the worldwide coronavirus crisis and the current exchange rate mean that buying property overseas has become less attractive for local buyers in the luxury market. What’s more, some international buyers are very much aware that they can pick up bargains in sought-after areas while the exchange rate favours them significantly. Seeff Property Group chairman Samuel Seeff says he doesn’t expect demand to flare up in the luxury residential market because it had already been in decline over the past 18 months because of the state of the economy. However, luxury estates are the exception “as there’s an increase in demand for the secure lifestyle on offer”.
Property developers involved in luxury estates confirm this. Rawson Developers property consultant Brad Morgan says despite the lockdown the company had record sales at The Westwood, a new luxury apartment development in Upper Observatory, one of Cape Town’s southern suburbs, during April. Other developers, too, report an increase in market activity at luxury estate developments. In Joburg there’s been an increase in queries as well as sales in Tricolt’s luxury security estate developments, says CEO Tim Kloeck. “We’ve signed more deals than in February,” he says in reference to the high-rise residential development Ellipse Waterfall in Waterfall City, Midrand. “For those who have the money to invest, with the banks offering very low interest rates right now, this is the perfect time if you want a house in a good area,” says Rawson Property Group chairman Bill Rawson.
Kloeck says Tricolt has had an increase in queries from people looking to downscale from their houses to buy a home that’s safe and secure. “In the first place they’re looking for safety and security, but the lifestyle also appeals to them,” he says. For instance, the luxury residential development Brookfield at Royal in the Royal Johannesburg & Kensington Golf Club offers kilometres of running and cycling tracks.
“Unique properties like Brookfield at Royal and Ellipse Waterfall are standing the test of time and selling despite Covid-19,” says Kloeck. Even during the lockdown – although representatives were not allowed to see clients – they were signing deals via video conferencing and online communication networks. Also attracting attention are luxury estates in nearby Centurion, such as Midstream Estate and Centurion Gold Estate, whereas in Pretoria East luxury estates such as Waterkloof Boulevard and Woodhill Golf Estate are in high demand.
The Cape Town Metro comprises some of the country’s most exclusive neighbourhoods such as Clifton, Llandudno and Camps Bay on the Atlantic Seaboard; Oranjezicht and Vredehoek in the City Bowl; and Constantia and Bishopscourt in the Southern Suburbs. “There’s been some activity, but there’s certainly been no rush to jump into the property market quite yet,” says David Sedgwick, managing director, Horizon Capital, the developers of a collection of penthouses in Oranjezicht and Vredehoek. He believes people are proceeding cautiously and conserving cash until the full extent of the economic damage and the road to economic recovery are clear.
On the Atlantic Seaboard, Seeff has had continued interest in apartments in the Waterfront and in the Mouille Point and Sea Point area, with sales predominantly in the R6m to R18m price bands. Welgedacht Estate in the Northern Suburbs and Silverhurst Estate in Constantia in the Southern Suburbs are also among the developments that have remained popular with upper-end buyers.
The Cape Winelands
The Cape Winelands has broad appeal, with the towns of Paarl, Franschhoek and Stellenbosch offering luxury estate living in convenient locations – close enough to Cape Town yet retaining the sought-after country lifestyle. Jordan Greenhalgh, Pam Golding Properties agent at Val de Vie Estate and Paarl Valley, reports getting enquiries from international buyers and investors looking for so-called bargains. “Most of the international buyers have visited South Africa before or have some connection with the country and the area they’re buying in,” she says.
In Stellenbosch there’s a lively interest in new developments, which hold considerable appeal as there are no transfer fees payable, according to Vanessa Johnson, the Pam Golding Properties agent here. “People prefer luxury upmarket lifestyle properties that require little maintenance,” she says. Stellenbosch, Paarl and Franschhoek are also attractive to HNWIs wishing to retire. According to Di van Graan, another Pam Golding Properties agent for Stellenbosch, retirees tend to prefer lifestyle estates over retirement villages. “People looking to relocate from upcountry mostly rent in secure estates while they decide where they would like to live, so there’s always a demand for rental properties,” she adds.
Durban & Umhlanga
The New World Wealth report lists Umhlanga and Ballito in KwaZulu-Natal as two of the fastest-growing areas in South Africa in terms of wealth growth over the past 10 years. The apartments on Lagoon Drive in Umhlanga are some of the most expensive in the country. “The trend in the luxury property market, even before lockdown, indicated a strong swing towards estate living and security,” says Erasmus. The North Coast continues to attract an influx of buyers from the rest of the province, as well as Gauteng and other regions and even globally, says Seeff North Coast principal Tim Johnson.
Palm Lakes Estate, one of the largest residential estates on the North Coast, is one of the property hotspots. Opting for eco-friendly developments such as Simbithi Eco Estate in Ballito and Balwin Properties’ Izinga Eco Estate in Umhlanga is another popular trend. Ultimately, as Kloeck says, despite the country’s economic challenges and the viral pandemic, the main benefits of real estate as a long-term investment still stands. Key among these is location, location, location – particularly if a property is situated in a sought-after lifestyle estate development in one of the country’s Big Four areas.