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Good prospects for investors in Grahamstown

15 Jul 2015

Founded by the 1820 settlers, the Eastern Cape city of Grahamstown is a historical treasure, an educational hub and, of course, the home of the National Arts Festival held every July.

Founded by the 1820 settlers, the Eastern Cape city of Grahamstown is a historical treasure, an educational hub and, of course, the home of the National Arts Festival held every July.

In addition, Steve Birt, managing principal of the local Sotheby’s International Realty franchise, says it has proved to be a good option for property investors, and not just those with their eye on the student market.

“There is of course always a strong demand here for flats to accommodate students at Rhodes University, but freehold family homes have also shown good value growth in recent years,” he says.

According to property data company Lightstone, 101 freehold homes have been sold and transferred in Grahamstown over the past 12 months, at an average price of R1.1 million.

However, he says the average price paid for the 20 freehold properties transferred in the past three months was R1.3 million, which reflects how prices have increased since the beginning of this year.

Similarly, the Lighstone figures show that the average price of the 47 sectional title apartments and townhouses sold and transferred over the past 12 months was R943 000, but that the average price paid for the seven units transferred in the past three months was R1.1 million.

This three bedroom, two and half bathroom house for sale in West Hills in Grahamstown is being sold with all its furniture and appliances. It has a private garden with built-in braai, and is selling for R2.8 million - click here to view.

“What is more, the data shows that property prices did not collapse in Grahamstown during the 2008/2009 recession as they did in many other parts of the country, and that they have grown by around 25% in the past five years.”

This steady growth is at least partly due to the fact that existing homeowners in Grahamstown are slow to sell, and that demand therefore usually exceeds supply by quite a margin, says Birt.

“This may seem strange for a ‘university town’ where one would expect a relatively quick turnover of properties, but the city also boasts many highly-rated schools, and we have seen an increasing number of buyers relocating their families here for the longer term so that the children can attend these schools, and then Rhodes.”     

This is underlined by research which shows that while more than 80% of recent buyers in Grahamstown have been under the age of 50, at least 58% of the existing property owners in Grahamstown are over the age of 50, and have lived in their current homes for 11 years or more.

“In fact, we have calculated that the average ownership period of the freehold properties sold since the beginning of this year is 17 years and 4 months, and that the average rate of appreciation on these properties is 11.53% a year, thanks to the pre-2008 boom.”

This two bedroom, two bathroom flat selling in Kingswood is modern and situated in a recently-built development. The apartment is on the market for R570 000 - click here to view.

Meanwhile, he says the owners of sectional title units now also tend to hang on to their properties for longer, precisely because they are making good returns.

“The average ownership period of the units sold this year is 10 years and 1 month, and the average rate of appreciation is 10.03%, on top of the rentals that many of these properties have generated over the years.”

Thus, he says it can be concluded that there is steady value growth here and that if you are prepared to hang on to your investment for the medium to long term, Grahamstown is an excellent place to buy residential property.”

He says properties they currently have listed range in price from just under R600 000 for a new two bedroom apartment close to Kingswood College to R5.8 million for a luxurious four bedroom home with several cottages in upmarket Oatlands, close to St Andrew’s College and the Peppergrove Mall.
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