Changing the face of seaside property
DEVELOPERS of a luxury residential estate on KwaZulu-Natal's North Coast have given preference to black buyers to guarantee them a slice of the lucrative property pie.
Of the developer's 10 upmarket residential developments established in the last decade, the new R55-million Izinga Ridge in Umhlanga will boast the highest number of black owners.
Now the company, Moreland, which sold 26 sites in an unusual bid process that openly favoured black buyers, plans to repeat the exercise in future developments.
"We're actively promoting black empowerment, not just paying lip service to it," said Moreland's director of residential developments, David Jollands.
Izinga Ridge sites - which range from 850m² to 1 500m² with a reserve price of between R750 000 and R1.3-million - were made available on a bid basis to more than 230 people on Moreland's waiting list. Bidders were told upfront that black buyers, provided their bid was within 5% of another bidder, would get first bite.
One of the successful black bidders, a 38-year-old Durban accountant, who declined to be named, said he was delighted with his purchase.
He paid almost R1.4-million for his 1 360m² site with seaviews and plans to start building a four-bedroomed home next year.
"Late last year I put my name on the list... I would never have stood a chance in the traditional route," he said. "In this way [the bid process], if you've got the money, you're in with a chance... it's levelling the playing field."
He said he'd always wanted a "big home" and found sectional-title-complex living limiting.
The second phase of the high-security, gated estate will be released early next year and it is likely the bid system will be used again.
Moreland has also encouraged black developers in other luxury projects in the area.
"I'd like to think the word is getting out that, unlike in the past, Umhlanga is no longer just for the white elite," Jollands said.
"It comforted our black buyers to know that, provided their bids were strong, they were not going to be pushed out."
Of the 234 people on Moreland's waiting list, which dated back four years, only 18 were black. They had been on the list for less than a year.
"If we'd gone the traditional first-come first-served route, these buyers would never have had a chance. The bid system gave them a better than even chance."
But it was an opportunity some white and Indian bidders objected to, Jollands said.
"We're confronting people's comfort zones and saying things have changed, we need to stimulate the market and make sure everybody gets their slice of the pie. People are naturally reluctant to change."
Brian Kirchmann, chief executive of the country's commercial property association Sapoa, said the initiative was morally and constitutionally correct.
"It's the way to go," he said. "It gives black buyers a small advantage to buy into these areas... it's a way of showing we really do want to assist."
Andrew Golding, chief executive of the Pam Golding Property Group, said anything that promoted the black emerging middle class should be "acknowledged and favoured".
"It sounds interesting, like something we could look at," Golding said.
Izinga Ridge sales manager Sandy Swart described the initiative as "brave".
"We didn't invite comment on our decision to operate this way because it would have been perceived as if we were asking for permission and we weren't," she said.
Although the official Black Economic Empowerment weighting was available, she said, Moreland hadn't needed to use it.
"The black bidders that made it did so because they actually had better bids," said Swart. Final prices for both the inland and seaview sites on the 7ha estate ended up on average about 2.4% higher than the reserve price. The average price was R775/m².
Article by: Megan Powers - www.sundaytimes.co.za