(Almost) Glittering again!
Pretorias residential stability is what Johannesburg aspires to, but has yet to reach as a brief glance at the average price of sectional title flats in Berea, a near equivalent suburb to Pretorias Sunnyside, will attest. According to the Knowledge Factorys South African Property Transfer guide, average flat prices in Berea have risen from R55 000 in 2002 to R133 000, while Sunnysides average went from R45 000 to R287 000.
There are two big differences that have kept Johannesburg lagging. Firstly, Pretorias core residential population are public servants who generally have above-average skills and education. They stay in one place for longer and, most importantly, have government-supported funding to become property owners. Secondly, the Johannesburg central business district (CBD) is a far bigger and more complex city. Its varied 200 000-strong population probably has a much higher proportion of transitional residents using the city as their first step from the country or elsewhere in Africa.
Certain residential trends are emerging. Young professionals are buying sectional title units newly created from offices in Braamfontein and the core CBD, attracted by the opportunity to get on the property ladder at prices as low as R140 000. The access to transport and work opportunities and the growing entertainment and nightlife developing in these areas are also playing a role.
These young professionals and students make up a significant part of the thousands of tenants in the office-to-residential conversions in the core CBD. Recent research shows CBD residents have an average age of 28, compared to those in Hillbrow and Berea whose average ages are just below the mid-30s. Extensive research carried out by inner city venture capital company Aurik shows the female head of households renting in the CBD tend to be older than their peers in Hillbrow, Berea and other inner city suburbs.
This is because the rents of the new office conversions in the CBD are higher and the flats smaller than Hillbrow, so only the more established women with small households can afford them, Aurik partner Carien Engelbrecht says.
It's cheaper, more convenient and hip to live in the CBD.
Correspondingly, the male head of households tend to be younger with Engelbrecht indicating many of the tenants live in nearby townships, but faced with two-hour daily taxi trips to work touching R800 a month, it is cheaper and more convenient to rent in the CBD. Of course its hip to live in the CBD, she says.
Hence, the CBD is becoming the first-choice home suburb for the upwardly-mobile venturing into Johannesburg. Engelbrecht notes it is 'far less densely populated than Hillbrow, Berea and Yeoville'. The big property investors Afhco, run by the Plit brothers Renney and Wayne, and the Wapnick familys City Properties are the big suppliers of new accommodation. Afhco produced 2000 units in recent years and City Property 1500.
Financial services giant Old Mutual is a common partner to both big suppliers with Old Mutual Properties putting its old city offices into joint ventures with City Properties and Old Mutuals social responsibility fund, Old Mutual Infrastructure Development and Environmental Assets Fund (IDEAS), taking a 50% stake in Afhco.
IDEAS Fund spokesman Sean Friend says: Typically, buildings are converted into blocks with bachelor or one-bedroom units. Because tenants priorities are safety and cleanliness, the blocks are access-controlled with a turnstile, thumbprint scanner and a system where visitor access is strictly controlled by security guards.
Strict regulations dictate laundry hangs in a laundry area and not on balconies. Friend says tenants like the rigidity of the system and the consequential peace of mind. Most units have built-in kitchen counter tops and fridges and some blocks have a gym and a crèche. The properties are likely to offer broadband access as many tenants are already online.
The nicer the buildings are architecturally, the better they will be let.
The extra investment pays off. We have found tenants actively support these controls rather than rallying against them. Also the nicer the buildings are architecturally, the better they will be let, he says. Ahfco has now moved into the eastern inner city suburb of New Doornfontein to open up a further residential area in one of the citys first residential suburbs. Renney Plit predicts the precinct will be home to 10 000 people in the next few years.
Afhco, property consultancy company Chelsea Manhattan and Amdec Property Development are converting a 19-floor Nedbank property into South Africas largest single block of flats with 850 units. This will help drive renewal of the New Doornfontein area and mean we can have a rejuvenated area around Ellis Park by 2010 (when South Africa hosts the World Cup Soccer), which will be a real boon, Friend adds.
The redevelopment will require a new taxi rank and the upgrading of the two railway stations, but the developers are working with the Johannesburg Development Agency (JDA) and approaching the Gauteng Economic Development Agency (GEDA) to ensure these areas form the nucleus for inner city renewal.
Investors in Hilbrow, Berea and Yeoville say progress is being made, prices are rising fast and so are rents. However, Property Owners and Managers Association head Brian Miller says the council continues lagging private sector improvements, particularly concerning environmental health, the metropolitan police and the issuing of clearance certificates.
Trafalgar Inner City Report
Article by: www.iafrica.com