Cape Town’s Southern Suburbs has long been a popular residential area, especially with families looking to live near good schools and amenities but a spike in demand in the fourth quarter of 2022 driven by semigration has further fuelled the market with stock shortages looming in many suburbs.
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This is according to Lorraine-Marie Dellbridge, Rentals Manager in the area for Lew Geffen Sotheby’s International Realty, who adds: “During the course of 2022, we noticed stock steadily dwindling and by year-end, properties were literally flying off the shelf.
“In January we had less than half the amount of stock than we had in August – just four months previously – and at the moment it’s not uncommon for leases to be concluded within three days of listing.”
Dellbridge says that after a bumper year in 2019, the market ground to a halt in March 2020 with the only real activity being that the market became flooded with short-term rental properties coming back onto the long-term market.
“In 2021, the resurgence of semigration, the reopening of universities and increasingly realistic pricing expectations from landlords kick-started the market again and we were finally able to let the properties that had been vacant for some time.
“However, last year was when the market really began to bounce back and this strong recovery has certainly been, to a large extent, driven by the country’s economic woes and energy crisis.
“The Western Cape is perceived to have better service delivery and governance than the other provinces and Cape Town also has less loadshedding and, as power outages have been increasing, so have our enquiries.
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“At the moment, around 60% of our current enquiries are from people looking to move to the Western Cape from other provinces and, interestingly, we are also fielding a surprising number of enquiries from expats returning to South Africa.”
Dellbridge says that freehold homes in suburbs like Constantia, Claremont Upper, Plumstead and Tokai are highly sought-after with the most active price band being R20 000 to R30 000 per month whilst sectional title properties priced between R8 500 and R13 000 are snapped up.
On the False Bay coastline, Muizenberg and Fish Hoek have become popular destinations as they offer great value for money and an enviable lifestyle with a seaside village atmosphere.
During the period 2016 to 2021, the Western Cape attracted nearly 300 000 net migrants, with international locations (98 317), Gauteng (65 683) and the Eastern Cape (53 601) being the top three origins and investment buyers are quite understandably eyeing the rental market as a viable option.
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However, Dellbridge cautions that whilst rental properties in popular areas in the city are always a good investment, those looking to enter the market now should only do so if they are in a position to make a long-term investment and don’t need to see immediate returns.
“In the short term you may need to put money in but by year five you should be covering your costs and thereafter making enough to start putting away for a rainy day.
“It’s also a good idea to make sure that you have excess funds to cover your expenses should your tenant have a shaky month or the property suddenly becomes vacant.
“Most importantly, be realistic about the rental price. Get valuations from more than one professional Rental Property Practitioner and make sure they have experience in your area and understand the local market.”
Dellbridge says: “Even though times are tough, property still remains the best investment if you buy in the right area and at the right price so do your homework, speak to professionals and be willing to play the long game.”
Centralised living is becoming the norm
Centralised living makes a lot of sense in today’s fast-paced world, especially with the rise of mixed-use development luxury living. The benefits of centralized living are many, from cost savings on transportation costs, to uninterrupted services and seamless technology, and to a sense of community among like-minded professionals.
Astrino Nicoloudakis Chief Investment Officer of Acsion Limited at Acsiopolis Mixed Used Precinct focuses on why centralised living is the way of the future.
As cities become more crowded and people search for ways to make the most of their time, centralised living has become an increasingly attractive option. From luxury developments to mixed-use buildings, centralised living allows for an uninterrupted lifestyle that is tailored to the individual. With access to amenities, services, and technology, it is easy to see why so many are turning to this option.
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For the most part, living in a centralised location offers access to uninterrupted services, such as utilities and transportation. Instead of having to commute long distances to access essential amenities and services, people can access these quickly and easily from the comfort of their own home. This not only saves time, but also money, as it eliminates the need for long-distance travel.
Moreover, centralised living also gives people access to seamless technology. With the rise of the Internet of Things (IoT), residents can connect their home appliances to their phones and gain access to a wealth of data and features. From controlling lighting to setting thermostat temperatures, centralised living allows individuals to make the most of their technology and enjoy a connected lifestyle.
Mixed-use developments are a great way to experience centralised living in luxury:
With top-of-the-line amenities, such as gyms and spas, and shops and restaurants, mixed-use buildings offer a one-stop shop for all of the services and amenities that might be required. Furthermore, these buildings usually feature smart technology, such as automated systems, that allow for efficient management of the amenities and services, making life even easier for the residents.
One of the biggest advantages of centralised living is cost savings:
With lower transport costs (due to the reduction in diesel and petrol usage), residents can save money while obtaining services and conducting meetings within the building. The cost savings are further boosted by the different types of meeting spaces available, such as hotel-standard conference rooms for professional and corporate clients, co-working pods and hot desks for venture capitalists, reception lounges and office pause areas for informal dealmaking, and neutral meeting areas.
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Another factor to consider is public transportation:
Cities such as Sandton have a strong public transportation infrastructure, thanks to the Gautrain and its quick access to the airport. This means that residents can go about their day-to-day activities with peace of mind, knowing that their personal belongings are safe and secure. Furthermore, the mixed-use buildings prioritise safety, making it easier for residents to lock-up-and-go, whether it be to catch shuttles, trains, or travel to other destinations.
eCommerce is also made more accessible with centralised living, as residents have access to various delivery services like Uber, Checkers, and Mr D. This convenience is coupled with the benefits of being part of a community of like-minded professionals, entrepreneurs, and digital nomads. The mixed-use building provides an environment where these individuals can cross-pollinate ideas, interact with different uses, and work in different areas with different people.
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For digital nomads, a centralised living environment is essential. They need a base and infrastructure to work and travel, and a community of individuals who share the same ideals. The multi-use building offers the ability to change their environment on a daily basis, which is crucial for digital nomads who are always on the move.
The South African energy crisis and the impending ‘water shedding’ have also highlighted the need for centralised living:
Service delivery from municipalities and government organizations continues to be a problem in South Africa, and the trend is unfortunately spiralling downwards. To combat this, landlords and developers are designing buildings that take these services off the grid and provide uninterrupted delivery to tenants and guests. However, it can be difficult to achieve a cost-effective solution for both the property developer and tenants, as some services like climate-controlled air-conditioning are energy-intensive and difficult to provide during loadshedding. The multi-use building caters to the population and each individual's temperature and health requirements, making it a much more desirable option.
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Safety is also a concern in South Africa, and estate living is not suitable for the majority of the population due to the increasing levies required to maintain the standard of living and 24-hour security. In a high-rise mixed-use building, costs are contained as there is a reliance on technology, and fewer security officers are required. Although the initial cost of building a high-rise mixed-use building may be higher, the savings and efficiencies across the uses and services are passed on to the tenant once critical occupancy levels are achieved.
Finally, the trend among property developers is to build-to-let rather than build-to-sell:
This allows for annuity revenue income, capital appreciation, and a reduction in costs, as mixed-use buildings without a body corporate do not need to keep 25% of their profits for a repairs and maintenance reserve. The ever-increasing building costs, coupled with the demand for rental properties, has driven this trend. Moreover, the build-to-let model provides property developers with a stable source of income over a longer period, compared to the once-off revenue from build-to-sell. This has made build-to-let an attractive option for property developers in today's market.
Technology drives the interaction in mixed-use developments and enhances the overall experience for tenants:
Utilizing the latest trends in OpenAI and IT infrastructure, property developers are able to provide services such as security (electronic locks), entertainment (Netflix, Showmax), loyalty programs and discounts, without the need for people-oriented customer service which is suffering due to the skills shortage in South Africa. This seamless technology makes living in mixed-use developments a desirable choice for those seeking cost savings, ease of access to services, and the convenience of all amenities being under one roof. In conclusion, centralised living in mixed-use developments, with a focus on luxury living, uninterrupted services and seamless technology, is a sensible choice for both individuals and businesses.
Overall, centralised living offers numerous benefits for those looking for an uninterrupted lifestyle. From luxury mixed-use developments to access to utilities and seamless technology, this type of living makes a lot of sense for those looking to make the most of their time and money.
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