The top end of the global property market is usually the segment that bears the brunt in an economic downturn, and traditionally dominant, desirable local markets like Cape Town’s Atlantic Seaboard and City Bowl are no exception.
However, savvy buyers know that it’s also in these market conditions that the best investments are to be found, just as astute developers who adapt to prevailing conditions and market trends will draw the lion’s share of ‘new build’ investor attention.
According to Brett Leon, Managing Director of the recently launched Lew Geffen Sotheby’s International Realty office that serves the Atlantic Seaboard and City Bowl, development in these areas is still fairly active due to the prime location and inimitable lifestyle offering.
“There is still a healthy appetite for lock-up and go sectional title residences, in particular, in prime locations, and a number of developers have adjusted their focus to cater to the tempered market with more accessibly-priced units coming to market that still tick all the right boxes,” says Leon.
“But we have seen a number of larger developments come under considerable pressure due to significant price adjustments over the past 18 months, especially those where the land was bought during the inflated property bubble from 2014 to 2017 when double-digit growth saw prices skyrocket.”
Lew Geffen Sotheby’s International Realty Atlantic Seaboard and City Bowl Director Andrew Cairns, says the best-performing sectional title price band at the moment, particularly on the Atlantic Seaboard, ranges from R1 million to R4 million.
“This price band is attracting first-time buyers, investment buyers taking advantage of the softer market and those who realise the enormous potential that prevailing conditions offer in respect of upgrading their long-term portfolios in what is still a buyers’ market,” he says.
“In the mid- to upper-end price bands there is still considerable interest from upcountry and foreign investors. The first group is split between semigrants and buyers who are looking to acquire second homes, while the latter is dominated by swallows who visit Cape Town once or twice a year.”
Cairns says apartments are usually first choice for national and foreign buyers seeking second homes because these properties offer lock-up and go convenience and greater security, along with top-of-the-range fittings and finishes.
“Demand from these two markets has been evident since we opened the company’s doors and started off-plan marketing of a new development in Bantry Bay. Comprising only 11 apartments, including an exclusive 280sqm luxury penthouse, the 7 on Bantry development offers discerning investors the ultimate oceanfront lifestyle,” he says.
“All the units are elevated off ground level, which optimises security and views, and the development includes secure parking as well as a concierge reception that will among other things, manage visitor access to the building.”
Priced between R2.7 million and R9 million, the two bedroom units and penthouse boast private plunge pools and all apartments will have DStv and fibre connectivity, dedicated off-street parking, Oggie flooring and individual climate-control.
According to Leon, market-related adjustments to asking prices on the Atlantic Seaboard, in particular, are opening the property market to a much broader scope of buyers.
“At the entry level, where recent price adjustments have made it possible to buy apartments for under R2 million, budding investors and first-time buyers are now able to penetrate the market,” he says.
“At this level, a downward sale price correction of just a couple of hundred thousand rand, which is what we’re seeing in the softer market, makes all the difference.”
Leon says it’s largely this market shift - noted in FNB’s House Price Index for Q2 as a year-on-year price deflation of 3.7% - that’s buffered the area against the sharp decline many neighbouring markets have experienced.
“There has also been substantial new development in and around the Foreshore, Waterfront and De Waterkant areas in recent years, with a good combination of luxury and value options now coming to market,” he says.
“You can buy an apartment in a new or newly-refurbished block with excellent finishes and probably a sea or harbour view for a very competitive price per aquare metre that will generally be less than similar options in areas like Sea Point, Fresnaye and the like.”
According to Lightstone data, the number of sectional titles registrations on the Foreshore this year shot up to 113 by the end of August, rising from just 10 and 8 in 2017 and 2018 respectively. The median price has also nudged up to R3.7m from R3.696m in 2018.
And in De Waterkant, the median apartment price breached the R2 million mark in 2015, climbing steadily over the next three years to reach R3.5 million in 2018, which was largely due to the completion of a number of well-positioned new developments.
Cairn also expects the rental market to improve in the City Bowl and on the Atlantic Seaboard with the advent of summer, especially in the sectional title sector which is the most popular choice for holiday lets.
“Locals generally move house towards the end of the year when leases expire and children must enrol at schools. It’s also when tourists begin planning and booking holidays. Cape Town still features well on the international tourist calendar. If developments are modern and in close proximity to beaches, important landmarks and entertainment hubs, they’ll reap great volume returns on the back of forex spend and an exceptionally tourist-friendly exchange rate,” he says.
“And those looking to invest while they are visiting the city will find many excellent buying options with a comprehensive value proposition.”
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