While off-plan buying activity remains high in and around Nelspruit, the provincial capital and commercial hub of Mpumalanga province, the rate of impulse buying is cooling down as buyers, some with burnt fingers, increasingly set their sights on working only with established and professional developers.
That's according to Mark Pearce, owner of the Realty 1 International Property Group franchises in White River, Nelspruit, Hazyview and Marloth Park, who says that the Lowveld is a hive of new development activity with developers steadily buying up tracts of land to subdivide and then selling off stands or building packages.
But while he is the first to laud the high standard of design and workmanship in some of the new projects, Pearce says that prospective off-plan buyers need to choose their developers with care. "Buying off-plan carries with it certain risks if you don't work with a reputable developer," he warns. One of these risks is signing contracts and putting down deposits before full approval for the development has been received from the local authority, with the potential spin-off being that the project could be delayed indefinitely or even permanently shelved. "This would be a major problem for buyers with time constraints as well as the more obvious risk of losing one's financial investment."
Apart from the financial risks, there is also an aesthetic consideration since not all developers are in touch with what the market really wants, says Pearce further. This is worth noting not only by end-user buyers but also buy-to-let investors who could struggle to get tenants for their units in the long run.
Pearce, who has been involved with developments for the last 8 years, strongly advises buyers to stick with experienced developers whose good reputation precedes them and to do their homework thoroughly.
This would include finding out whether services such as roads are scheduled to be installed before or after registration, which will affect access to the building site. "Building will be delayed for as long as there is no access to the site, so you could find yourself paying off a bond for months before a single brick is laid," he points out, adding that a four month delay on a R400k bond translates to more than R20k.
However, Pearce adds that professional developers with good reputations have such a strong following in the area that there are waiting lists of people for their units. "Trust and credibility are driving sales more than anything else in the Lowveld," says Pearce, adding that there is a lot more common sense prevailing in the market than there has been for years.
An indication of the current rate of market activity is the speed at which the 71 erf Kiaat development sold out. Aimed at middle market buyers and investors, the development's prime location and high quality ensured lengthy waiting lists prior to launch, says Pearce. The stands were priced at R390k, confirming a massive need for stock in this price range.
Further afield in White River, pending the imminent lifting of the area's water moratorium, two new developments will be coming on line shortly and there is already a waiting list for stands, he reports.
Interest is also strong in a newly launched eco-development called Hamilton Park, located between White River and Hazyview, on the side of a mountain. According to Pearce, the one hectare stands, which are priced at just over R500k are being snapped up by overseas buyers who value the area's proximity to the Kruger National Park and its magnificent bushveld setting. Currently, foreign buyers account for 50 percent of the sales in the Hazyview area, he says.
Finally, he adds a cautionary note to buyers, saying that they need to do their sums carefully before buying to ensure that they can still afford their monthly bond installments even if the interest rate goes up.
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Readers' Comments
I am having an experience with a development where I have bought and the building contractor is one of the biggest in South Africa. Even with the reputable there is problems. Because of sub contracting, etc I eventually called in the NHBRC and they closed my site down. Repair work has started again. They cover up all the mishaps.
My advice is never buy off-plan or a unit that has been built in the last couple of years. I was given the line 'you can trust us because we a reputable contractor'.
Experienced
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