Plettenberg Bay in the Western Cape has long been considered one of South Africa’s premier holiday destinations where many of the country’s well-heeled own luxury holiday homes, however, this scenic coastal town has now also begun to attract the attention of savvy investment buyers looking to diversify their portfolios.
Steven Neufeld, Manager Principal of Lew Geffen Sotheby’s International Realty in Plettenberg Bay, attributes this largely to three key factors: a sharp increase in the number of permanent residents, the ‘newfound’ ability to work remotely and a resilient, record-breaking market.
“In 2020 when we least expected it, the total value of sales broke the R1 billion mark again for the second time ever and, in 2021, the sales value spiked by a whopping 82%, breaching the R2 billion mark for the first time in history, with the number of sales increasing by 44% and average prices rising by 26%,” says Neufold.
“In 2021, most estate agencies reported record sales with many doubling their previous records by the third quarter. Again in 2022, we have had an unusually busy winter,”
He adds that entry-level asking prices, which had remained relatively stable for a number of years have also increased considerably over the past three years.
“It’s difficult to find full title homes below R3 million and sectional title unit prices now begin at around R1.5 million with vacant land starting at about R495 000 in gated estates and R750 000 in open areas,” says Neufeld.
Underpinning this robust market is the ongoing surge in semigration that began after the end of lockdown restrictions and which has exponentially increased the number of permanent residents and transformed the property landscape.
“Until recently, the rental market was mainly limited to holiday lets which was never very lucrative,” says Neufeld.
“With a yield of around 3% to 5%, it was usually intended to cover the costs and maintenance of the property which was also used by the owners for holidays, with the true profit being through capital gain.”
However, this is now changing, and Neufeld says that there is now growing demand for residential rental property and very limited stock.
“With our permanent resident numbers growing monthly, there is strong demand from upcountry people relocating as well as from locals and the most active price band is between R8 000 and R25 000, with mostly Gauteng tenants occupying the top end.
Owner broker, Hein Pretorius, says this shifting demographic is also changing the property landscape in Plett because not only is there more demand for security estate homes but also more current trends such as lock-up-and-go, mixed-use properties like the new Plett Quarter which is already under construction.
Plett has currently *122 new property listings, according to Property24 Trends Data, with the average asking price being R2.85 million vs the average selling price of R1.85 million.
The average sale price for a sectional title for the 2021 period was about R1.65 million while erf average sale price for the same period is R2.05 million.
The latest residential listings on Property24 show that five-plus bedroom homes are most widely available, at an average list price of R8.425 million.
78% of the sellers are older than 49 years old, while 53.5% of buyers are younger than 49 years old.
Click here to see all the sale and listing price trends in Plett
“The Plett Quarter is in an excellent location on Main Street at the Dolphin Circle and includes residential, commercial and hotel components with a variety of first-class amenities that residents will be able to use,” says Pretorius.
“There has been considerable interest, especially from professionals who work remotely and regularly commute to other cities and so far, 50% of the 22 residential units have already been sold.”
The Plett Quarter, a first for the seaside town, ticks all the boxes for buyers who are looking not only for luxury seaside living but who also value convenience and walkability.
Of the 22 units, 12 are penthouses which offer the option for owners to upgrade the terrace deck with plunge pools and all are designed to optimise natural light and the stunning views with designer kitchens, Smeg appliances and limed oak engineered wood flooring,
Features of the development include a shared rooftop pool as well as on-site restaurant and a lifestyle commercial component with niche shops and food offerings along the street edges.
The Sky Bar, in addition to serving refreshments and drinks throughout the day, will also offer breakfasts and light meals from the hotel’s signature restaurant and the generous pool deck area has a sweeping vista of the ocean and landscape.
“The burgeoning rental sector adds a whole new dimension to real estate in Plett and offers investor purchasers many new opportunities,” concludes Neufeld.
“However, as it’s a relatively new investment market, it’s essential that buyers do their homework and due diligence and also get quotes from multiple agents to establish projected income.
“And, if you are entering the short-term rental market, consider the times you want to use the property yourself vs. when rentals are the highest.”
Plett Quarter units are priced between R4.7 million, and R9.5 million, including VAT, transfer duties and agent commission.
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*Property24 Listings Data Disclaimer: The trends detailed in this article are based on Property24 listings, current at the time of publishing, and property transfer data supplied by Deeds offices, which typically take 3-4 months to reflect. Suburbs are listed according to Property24's geographical database. In some areas this will include both commercial and residential properties. The age demographic data of buyers, sellers and stable owners is determined over a six-month period. These Property Values should not be used as a substitute for independent professional advice and is subject to Property24.com Terms and Conditions.
