In the area 3 Ballito
Things werent looking good early this year for Ballito, the town north of Durban made famous a decade ago by the plush golf estate Zimbali. It had become a typical coastal second-home boomtown-gone-bust.
Monthly house sales by estate agent Pam Golding fell 71%, from R28m two years ago to R8m early this year. It was as though a door suddenly closed, says local Pam Golding chief Clive Greene. And the average price of houses in the town has fallen 10% so far this year to R1,45m, according to deed office data from Lightstone Risk Management.
But things changed in May. Golding and the developers of Zimbali and nearby eco-estate Simbithi have been showering the media with press releases about big upticks in sales.
Greene says his agents sold properties worth R20m last month, reducing the decline from peak sales to 29%.
Elan chairman Mark Taylor says his staff signed nearly 30 deals at Simbithi in May. They were down to 18 in June, but still ahead of last year and enough to push half-year sales up 15% over the same period last year. Taylor and Greene say the jump in sales has mainly been in the middle-income R800000-R2m price range. And most demand is from people making Ballito their permanent home.
The primary source of this demand is the new King Shaka airport being built at La Mercy, 15 minutes from Ballito, says Greene. Its now ahead of schedule and due for completion in October 2010. Whereas the current Durban airport has 3000 employees, King Shaka will have 9000, and we have people buying homes ahead of moving here.
The airport will initially have a capacity of 8m passengers a year, growing to 40m over a decade. Greene says the ratio of second-home to permanent buyers has fallen from 70:30 to 50:50.
We also have airport-related buyers, says Taylor. But many are moving here because of new business opportunities. He believes the Dube trade port, once it is built, will give Ballito an even bigger boost than adjacent King Shaka.
Most of Elans business is from resales, probably second-home buyers taking profit or under pressure, selling to permanents. He also sees the first signs of Umhlanga residents, having migrated 20km north of Durban a decade or so ago, now beginning to shift to Ballito.
But Greene says prices remain down, despite the new demand. Were at the stage where we see fewer desperate sellers at our office, says Greene. We dont expect prices to rise for some time.
Keith Wakefield, head of the regional estate agency named after him, agrees that Ballito is not yet booming. Sales in similarly priced Durban suburbs such as Umhlanga, Kloof and Hillcrest are also up 15% or so, similarly to Ballito, he says. But theres no doubt that Ballito is the great growth story of the future.
For the moment, developers are languishing with few sales, and some estates further from Ballito than Simbithi and Zimbali are in trouble. Their main problem is that banks have mostly withdrawn from residential development finance. Developers feel like guests at a party that the host has left, taking his food and drink with him.
The big exception is Zimbali, which has reported sales worth about R500m so far this year. But this 700ha leisure behemoth is a market on its own. Its boost in sales comes more from its growing mixed-use complexity and the promotional skill of IFA, the Kuwaiti controlled, SA-listed 50% partner in the estate with Tongaat Hulett, than from the effects of King Shaka airport.
About R100m came from sales of more affordable R1m-R2m development stands in the new Zimbali Lakes project; another R200m came from resales of the grand homes in the original development, the Zimbali coastal resort, where sea-front houses sell for R35m or more.
Only 1300 of the potential 2500 residential units have been built.
IFA has also sold R20m worth of land for office development in the Zimbali estate at a bulk metre price the price the buyer pays for each square metre of lettable space he is allowed to build of R2600. This implies that office rents in the estate will start at over R100/m²
The Fairmont Heritage Place is a giant combination of SAs first Fairmont hotel, freestanding houses, hotel condos and fractional ownership units on Zimbalis beachfront. IFA has extracted sales of about R155m, mainly from Gauteng buyers, in the middle of a global property crash (see story, left).
IFA operations vice-president Phil de Sylva believes a further boost for Zimbali will come from direct flights by Emirates airline between Durban and Dubai. They will start from the old airport in October and will transfer to the new airport next year. Dubai is now the hub to the rest of the world and travellers in and out wont have to fly via Johannesburg anymore, he says. It will increase visitors to KwaZulu Natal. IFA has previously complained about the poor service for tourists at OR Tambo airport.
Both Ballito and Zimbali demonstrate the existence of not one property market but many in SA. Pam Golding CEO Andrew Golding says there are other markets in SA that are bucking the trend. Wellington in the Western Cape winelands is one, he says. It has lagged Stellenbosch and Franschhoek, but its prices are now catching up.
Stanford on the South Cape coast is also beginning to catch up to neighbouring Hermanus.
He says demand at Knysna has been steady from people moving to the coast. On the other hand, sales at Plettenberg Bay have started rising, mainly because prices there fell so much.
Golding says Port St Johns, the coastal hamlet in the Transkei, has now been discovered, with sales increasing and prices rising. Prices in the far East Rand town of Springs have also started taking off.
Article by: Ian Fife - http://free.financialmail.co.za