Cape Town - Bumper season for sellers

The Cape Town residential property market enjoyed a roaring December, say estate agents – and there are still tantalising pockets of opportunity to make healthy returns in 2006.

Johannesburg residents proliferated among the property hunters this Christmas holiday season, with Atlantic Seaboard flats top of the list of must-haves.

Rob Stefanutto of Sotheby’s International Realty (Lew Geffen) says it appears to have been a “very good season” for sellers in Cape Town so far, with Johannesburg buyers snapping up properties.

Sotheby’s has a number of Johannesburg buyers who have recently offered to purchase properties with price tags between R7-m and R16-m on the Atlantic seaboard.

R16-m will get you about 400m² of direct access to the beach and three parking bays in trendy Clifton, where you can expect to trip over topless fashion models on some of Cape Town’s finest beaches.

There has also been an up-tick in interest from foreign buyers. Nigerians, in particular, are eying Camps Bay properties while there are also a lot of Italians shopping for property right now, said Stefanutto.

Lock-up-and-go pads are in demand, he said. “Foreign buyers and Johannesburg buyers want that holiday feeling,” he commented.

Johannesburg buyers also want to buy in new developments.

Ian Slot of Seeff said his group has also experienced a bumper season in Cape Town. “December was one of our best months ever, particularly at the high end of the market.”

Traditionally February, March and April are the busiest months, said Slot, with many people who look at properties during the holiday period coming back to buy then.

Like Sotheby’s, Seeff experienced huge demand on the Atlantic Seaboard, particularly for upmarket apartments.

Joshua Raisun of International Realtors’ Apartments and Homes agrees there has been a “lot of interest” from Johannesburg investors – but said many have been browsing rather than buying.

“Some are shocked at the prices. They feel Johannesburg is over-priced and then they see what is on offer in Cape Town,” he said.

New developments are a big hit with out-of-town buyers, partly because they can avoid paying hefty transfer fees, added Raisun.

Mick Joyce of Pam Golding Properties said it has generally been a good season, with tourists – local and international - among those in the market.

“Buyers are certainly around and they are serious buyers,” he said.

Looking ahead, agents generally expect returns in the region of 10% to 15% this year.

There are many opportunities to make money in the residential sector under R1-m in Cape Town, according to Joyce.

Like others in the property industry, he believes properties in areas set for gentrification could prove to be solid investments – but be prepared to wait for several years.

Brooklyn, Rugby, Summer Greens – all near the massive Century City development, north-west of the city centre - and Woodstock, which is on the outskirts of the CBD, are among the areas Joyce believes are poised for above-average price appreciation.

You can still find homes between R350 000 and R650 000 in these areas, notes Joyce.

Raisun agrees Brooklyn, Rugby and Summer Greens, as well as pricier suburbs in the Century City vicinity like Milnerton and Edgemead, are set to produce solid returns.

Stefanutto is putting his money on Green Point, near the Waterfront, as one of the areas set to enjoy above-average returns in 2006.

He says there are still bargains to be found, particularly in older blocks where property is selling for far less per square metre than in new developments.

Anything under 10 000/m² is “good value” in Green Point, he said.

Slot, meanwhile, believes the CBD “is the place to invest”, despite an abundance of loft apartments currently on the market in that area. “I see it as the next Waterfront story.”

After the CBD, the City Bowl suburbs at the foot of Table Mountain are set for a price surge.

Still relatively unappreciated by property investors, according to Slot, is the Bo-Kaap, the Cape Malay suburb that draws throngs of tourists to its cobbled streets.

It’s got great views, is close to the city centre and has character, he said.
If you’re considering a buy-to-let investment this year, don’t over-extend yourself, cautioned Slot.

“If you are forced to sell, you may have to sell at the wrong time. The property investors who get burnt first will be people who overextended themselves.”

Buying in an area where there are lots of investors means you can expect rentals to come under pressure.

“Following the herd in any market isn’t a great idea. You need to see why people will want to live there. You need to understand the kind of person who will want to rent there,” said Slot.

Article by: Jackie Cameron -