6 minute read
The Shape of Things to Come
A look at South African residential property investment trends, with the focus on 2019
High-end residential estates have outperformed the general housing market over the past year. A large number of lifestyle and golf estates are adding luxury apartments to their offering, creating small neighbourhoods within the estates, and introducing parks, birdlife and walking trails. We look at these and other residential development trends.
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SECTIONAL TITLE OVERTAKES FREEHOLD
The appetite for sectional title property in South Africa is growing faster than the demand for freehold homes. Sectional title purchases in South Africa have grown by up to 5% per year since 2003, a recent Lightstone Property report shows. The demand for freehold property, on the other hand, has shrunk year on year: in Q3 2018 alone, the number of freehold transactions dropped 6.9%, whereas sectional title sales rose 0.3%.
Jessica Hofmeyr, head of operations, sales and marketing at Century Property Developments, is not surprised. First, it is easier to source finance for sectional title property. “One can have bonds of up to 100% approved provided the property is located in a desirable area,” she says. “This makes a project more financially feasible."
Craft Homes marketing manager Jessica Cabanita agrees. “Sectional title homes are usually less expensive and provide less hassle because one typically buys off-plan." As an example, Sandton Gate offers open-plan units that start from R2.95 million for a two-bedroom apartment that comes with home automation and Miele appliances.
Bryanston is also showing a healthy sectional title demand. Two projects that will launch soon are Porchester Road, which features 29 sectional title duplex homes, and Central Park — both developed by Zotos Property Group.
The appetite for sectional title property is also rising outside the city and its suburbs. Take The Lakes at Whistling Thorns at Serengeti Estates in Kempton Park, where phase 2 was launched earlier this year.
In the Winelands, Sitari Country Estate near Somerset West is drawing a lot of attention. “We sell about nine sectional title apartments a month,” says Claudius Combrinck, MD of AdLab, the marketing agent for the estate. “Sitari has seven boutique schemes available. These offer one-, two- and three-bedroom apartments from R975 000,” he says. “This includes transfer duty. Most come with two covered parking bays.”
THE RISE OF MULTI-GENERATIONAL LIVING
Families of two or more generations of adults living under one roof is a rising trend globally. According to Statistics South Africa, 32.2% of South African households are multigenerational. This can be attributed to higher cost of living, rising unemployment rates and cultural custom.
Lifestyle estates are increasingly embracing young, old and everyone in-between in sectional title homes as well as rental apartments, providing facilities that cater to children, working adults and those in their golden years, and providing convenience and security.
Lifestyle estates such as Sibaya Coastal Precinct in KwaZulu-Natal and Val de Vie in the Western Cape have all gone this route, offering an enviable lifestyle replete with nearby schools, shops, medical and care facilities, and every manner of sport and leisure activity. As they evolve, these multigenerational estates are embracing more investment brackets, offering a mix of apartments, townhouses and freestanding units of one to five bedrooms, priced anywhere from R1 million to R20 million and beyond.
Steyn City is a prime example of a multigenerational estate, with its huge diversity of owners and tenants and range of properties priced from about R2.2 million to more than R25 million. Its new “city centre”, scheduled for launch in 2020, will include 739 apartments and a central piazza with retail, restaurants and lifestyle offerings.
“We cater for everyone — from first-time buyers and small families to empty-nesters who don’t yet want to move into a retirement village,” says MD Clifford Oosthuizen of Westbrook Estate in Port Elizabeth.
The Yacht Club, a development by the Amdec Group – which is at the forefront of designing people-friendly precincts – will connect the V&A Waterfront to the Foreshore. It is modelled on the trend for walkable precincts like London’s Canary Wharf.
Another example is Century Property Developments’ Waterfall Estates in Midrand, embracing Waterfall Hills and Waterfall Valley mature lifestyle estates. The KwaZulu-Natal northern seaboard is dotted with multigenerational estates. Sibaya Coastal Precinct in Umhlanga includes Shoreline Sibaya, which comprises 400 modern single-level sectional title apartments for over-55s in a wheelchair-friendly environment.
In the Western Cape there is De Plattekloof Lifestyle Estate, aimed at over-50s, which includes homes, apartments and the Tijgerzicht assisted living suites to be launched this year.
Clifford Oosthuizen, managing director of Westbrook in Port Elizabeth, says living in the same zone and not necessarily in the same home comes with its own set of benefits. Developed by the Amdec Group, Westbrook comprises nine residential villages catering to multiple generations with a "town square" set to feature a variety of commercial and retail space. Ultimately, it will be a safe, secure, walkable precinct – the first estate of its kind in Port Elizabeth.
BRINGING THE COUNTRY TO THE CITY
Steyn City is one of Johannesburg's flagship country lifestyle estates. Until recently homeowners have had two choices, says Steyn City Properties CEO Giuseppe Plumari: make do with city grit, congestion hassles and the threat of crime in the suburbs, or escape for a peaceful life in the country that may also be "a little dull". He believes that parkland resort Steyn City has solved the conundrum by offering the best of both worlds: an idyllic retreat with all the conveniences of an urban hub.
“This has been made possible by Steyn City Properties' significant investment in facilities." Several kilometres of trails traverse this area. Outdoor exercise nodes and kids’ play areas further enhance this outdoor lifestyle. The estate also has its own restaurants, shops and a school.
The Waterfall development in Midrand, between Johannesburg and Pretoria, occupies 2 200 ha, with abundant green spaces between nodes of development. This sprawling area is desirable for residents wanting to get away from it all, yet have access to jobs and amenities in the city – even though Waterfall now has its own burgeoning CBD.
Much of the purchase and rental accommodation in the estate is developed by Century Property Developments. This includes the exclusive Waterfall Equestrian Estate and the Waterfall Country Estate. The largest residential area in Waterfall, the latter incorporates rental units The Sheds @ Waterfall, and cluster housing at Waterfall Crescent.
Renishaw Hills near Scottburgh in KwaZulu-Natal is situated in the Mpambanyoni Conservation Development, which will be made up of several interconnected residential and commercial villages.
A lounge in the beautifully restored 18th-century manor house on Clara Anna Fontein in Durbanville, a development by the Rabie Property Group that will soon have a retirement village, too.
“On the whole we have found that investors who choose to live in remote areas do so in an attempt to escape the ‘hustle and bustle’ of the city,” says Jessica Hofmeyr, Century executive in charge of sales, rentals, marketing and operations.
DEVELOPERS TURN TO RENTALS
The rental market is slowing or in some cases in decline, but developers have realised they can offer rentals at a lower cost and a wider margin than estate agents.
In Q2 2018, the national rental growth rate has trended downward, with a year-on-year increase of just 3.27% for June, according to the PayProp Rental Index. The Western Cape lost its spot at the top of the provincial growth ratings, with growth of only 6.97% in the quarter. The Free State, with rental growth of more than 8%, now occupies the top growth spot. KwaZulu- Natal has also trumped the Western Cape, with 7.31% growth (albeit in Q1).
In 2017, Balwin Properties announced it had formed a strategic alliance with Transcend Residential Property Fund to bring to market 8 900 affordable rental apartments over six years, worth an estimated R6.4 billion, across five developments in key Gauteng nodes.
Renprop, another developer that typically sells developments off-plan, has a residential rentals division to handle rentals on behalf of the apartments’ investor-buyers. It has also developed two pure rental scheme apartment buildings to cater to the demand for rental apartments in the Sunninghill and Rivonia areas of northern Johannesburg.
The developer is in the early planning stages for two additional pure rental scheme developments. "There is a definite need, and therefore a larger demand in the market, for rental units,” says Renprop MD Chris Renecle.
The Uvest Property Group develops large-scale housing complexes for sale to the open market, but a major component of its business model is to develop rental stock, which it reserves for placement in its affordable rental housing fund.
"We specifically adopted this approach as a ‘strategic hedge’ within the ever-fluctuating South African housing market,” says Philip van der Berg, residential funds director at Uvest. “We develop for sale at the top end of the market, and we develop to rent out in the affordable or middle-market segment."
The recipe for success entails the basic principles of property management: build a quality product but at a reasonable cost, and once complete and ready for occupation ensure that your tenant-vetting process is meticulous. Then, once let and occupied, maintain the strictest hands-on management control.
TEXT Debbie Hathway, Georgina Guedes, Helen Grange and Miriam Mannak PHOTOGRAPHS Supplied
