07 Feb 2013
Following the circumnavigation of the ‘fiscal cliff’ in the USA and some relief in the Eurozone countries, globally investor confidence has cautiously brightened.
“Property has always been a resilient asset class and locally, a confluence of several positive factors has made Umhlanga relatively resilient during the lean years of 2007 to 2010, and also able to respond quicker to the somewhat better international and local economic climate,” he says.
A key factor contributing to its demand among home buyers, whether for primary, investment or leisure use is Umhlanga's location. It’s centrally placed relative to Durban central, King Shaka International Airport and the growing business districts of Gateway Newtown and La Lucia Ridge.
It has a relaxed village atmosphere with a vibrant restaurant and night life, and is five minutes away from Gateway shopping centre, which is of world-class standard. Schenk says, add to this an appealing lifestyle, sub-tropical climate, and a clean and secure environment – with the Umhlanga Urban Improvement Precinct making an impact, all of which ultimately is favourable for property values.
Schenk says the property market continues to be favoured by homeowners and investors, not only for its quality and safe lifestyle but also due to the capital appreciation achieved in the residential market. For the investor, couple this with good rental yields (ungeared) of approximately five percent after rates and levies and the potential for strong rental escalation given the acute shortage of quality rental stock.
The most sought after units in the area range from R900 000 to R3 million, however the demand is across a wide spectrum. These include starter apartments in Gateway priced from R900 000 for a two bedroom, 65 square metre unit, the medium to upper range such as in the Beacon Rock development, where two bedroom, two bathroom apartments are selling for R2.4 million for a 110 square metre unit and at the top end of the market, beachfront apartments sell for up to R20 million.
Schenk says this year, the residential property market continues to experience sustained demand and they anticipate a shortage of stock for sale and rental will become more evident. He says the positive news is that low mortgage rates are a major factor in attracting investors and first-time buyers. The developments market is experiencing ongoing demand, although buyers are more cautious, insisting on quality coupled with value for money.
Over the past two years Pam Golding Properties has marketed PGA Park, 46 on Meridian and Bahia Club - all of which have sold out, as well as Beacon Rock, which is now 75 percent sold, Schenk says. The total market value of these four sectional title developments is in excess of R200 million, with prices ranging from R610 000 to R3.75 million. He says this year, there are more developments in the pipeline to cater for the ongoing demand.
In addition to the positive factors mentioned, Schenk says developers are prompted into action for a number of reasons, which include the ready availability of land around Gateway, a recognition that interest rates have bottomed - making capital relatively cheap, and competitive building costs arising from a depressed construction market.
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