'Black diamonds' fuel coastal property boom
The coastal property market continues to boom with prices higher than those in cities, say property experts.
One of the trends fuelling growth is the increasing number of "black diamonds" - the fast-growing affluent black middle class - buying holiday homes. Another trend is that modern technology allows wealthy businessmen to be based on the coast and operate their businesses from there.
Jacques du Toit, Absa Group senior economist, said four of the nine provinces had part of the 2 968km coastline - Northern Cape, Western Cape, Eastern Cape and KwaZulu-Natal. All but the Northern Cape had well-established coastal property markets.
Du Toit said that since 2000 the boom in the coastal property market had been driven by factors that included real economic growth, fiscal policy measures, access to mortgage finance, investment demand, household wealth, location and sporting activities.
However, he said there were a variety of other factors that had contributed to the significant rise in the domestic coastal property market in the past seven and a half years.
"Apart from favourable economic and socio-economic factors, the limited supply of sea-view houses, flats and vacant stands, with demand continuing to rise at a brisk pace, have made prices rise significantly."
The types of coastal properties that are doing well include single-stand houses, flats, apartments, estates and vacant land for residential development on the beachfront, or with sea views.
The internationally renowned Garden Route remains high on home buyers' priority lists, being an area with high appeal and excellent investment potential - whether buyers are seeking a permanent home, holiday getaway, pure property investment or a retirement home, according to Louis van Niekerk, regional manager for Pam Golding Properties.
"This is not surprising because the Garden Route incorporates some of the most desirable and scenic locations in South Africa."
In George, the hub of the country's prime golfing turf with renowned Fancourt on its doorstep and its own international airport, property values have increased dramatically over the past four to five years with a large influx of buyers from Gauteng and the Free State.
While at the top end of the market Pam Golding Properties recently sold homes for R4,5-million and R5,9-million, a quality family home requiring little or no work went for an average price of R1,5-million.
Van Niekerk said at the Wilderness, one of the most sought-after areas for holiday and retirement homes, sales had exceeded expectations.
A key element of its charm was that the Wilderness had retained its natural beauty, as the local council had stringent requirements for new developments.
"Over the past six years the residential property market has been buoyant generally property owners have at least doubled their money over the past three years. A stand in an upmarket area which sold for R300 000 in 2003, has just resold for R1,3-million.
A three-bedroom unit close to the lagoon and village, with sea views, sold in 2003 for R595 000, resold in 2006 for R1,75-million.
"Most investors are from Johannesburg and Pretoria, many of them entrepreneurs relocating for a better way of life. We've also noticed a trend towards younger buyers and black diamonds seeking residential property here.
"Properties range from vacant stands - extremely sought-after due to the scarcity of such land - for which one would pay at least R800 000 to R1,5-million, to duplex apartments a stone's throw from the beach and lagoon priced at R990 000, log cabin homes priced from R1,2-million to R1,6-million, and a broad range of houses priced between R1,5-million to R12-million for a beachfront house.
"For those preferring a more rural lifestyle, smallholdings range from R1-million to R3.5-million, and exceptional country residences are priced from R3,2-million to R13-million."
Plettenberg Bay - which was cut off by floods last week - has grown at a phenomenal rate over the past five years, with building activity in the newer areas of Brackenridge, Whale Rock and Schoongezicht continuing apace.
Over the past year the average house price increased by some 25 percent, with most of the properties selling in the R1-million to R2-million price range. Currently an entry level home cost R1,5-million and an apartment R850 000.
Mossel Bay and Sedgefield continue to reflect sound returns on good quality properties. Sedgefield's property prices doubled in 2004, then stabilised to more sustainable annual returns of around 10 percent. Sea front property which in 2004 was around R1,5-million for a stand, is now going for as much as R3-million.
Jeanne van Jaarsveldt, RE/MAX marketing and finance director, said: "The growth of the real estate industry in the Southern Cape has been exceptional over the last year.
"In fact, this is true of all coastal regions in Southern Africa, including the Western Cape, South Coast and all the way up to KwaZulu-Natal.
"It is true that a high percentage of the coastal investments are coming from inland and most of it from Gauteng investors."
Van Jaarsveldt also said that in Ballito, RE/MAX Dolphin Realtors owner John Pechey had record sales of R334-million two months ago.
It was the highest recorded sales outside of the United States among the more than 65 countries where RE/MAX has a presence.
Coen Bezuidenhout, managing director of Seeff Knysna, said: "We are experiencing an increase in buyers from the big cities in South Africa, especially Gauteng. Lifestyle and security were the main attractions, with capital growth an added bonus.
"Property on Thesen Islands and the Sparrenbosch/Pezula estates were the top performers here.
"Knysna is also a popular destination for the international visitor, who makes up a large percentage of our sales, and they're paying in international currencies which is also pushing up prices.
"Although we are expecting another very good selling season over the Christmas holidays in our prime estates, over-priced properties in traditional Knysna neighbourhoods will be under pressure to sell."
Artcile by: www.iol.co.za