Lights on but no one home

CLUSTER homes in northern Joburg valued at more than R3-million are gathering cobwebs.

While buyers are eagerly snapping up cluster homes priced under R1-million, some top estate agents are struggling to sell luxury units with price tags of more than R3-million — which resemble palatial homes more than cosy clusters — because of an oversupply.

They blame the glut mainly on greedy property developers and others in the industry who:

•Failed to properly research demand for expensive clusters; and

•Built units on speculation.

Erwin Rode, an economist who specialises in property, says: “The high-priced cluster units will soon be oversupplied, if they are not already so.”

Major cluster unit developments, according to Rode, have sprung up in Hyde Park and Sandhurst because the suburbs are centrally located and close to shopping malls, schools and the Sandton central business district.

Jawitz Properties, one of Joburg’s top estate agents, says that the average price for a cluster home in Sandton is between R1-million and R1.5-million.

In Morningside, Sandhurst and Hyde Park, prices range from around R2.5-million to R12-million, and even more.

Metro this week found that these exclusive suburbs are flooded with plush clusters valued at more than R5-million.

One property — going for a whopping R22-million — is in a four-unit cluster development in Sandhurst. The 1161m² home features five en suite bedrooms, two lounges, a home theatre, two garages and an atrium.

While prime 4000m² sites in the suburb sell for around R3.5-million, just one “ultra-luxurious” 760m² cluster home, which is still under construction, is on the market for R10-million.

Another Sandhurst cluster up for grabs for a whopping R8-million has four bedrooms, four bathrooms, three garages and two lounges.

Property development company Sable Homes says buyers are more interested in secure three-bedroom clusters priced under R1-million.

Managing director Jo Pelser says the oversupply of expensive units has been caused by developers who rushed into the market without conducting proper research first.

“Normally, developers build once the units have been sold but some start building on speculation.”

Jawitz Properties chairman Eskel Jawitz agrees, saying: “In addition, because developments from the drawing- board stage to building can take up to two to three years, clusters are being developed based on today’s demand without knowing what the demand-supply ratio will be when the development actually comes on to the market.”

Jawitz, who believes developers should do more research before building, says: “Supply increases to meet the demand and not the other way around ... and this is what has happened at the moment.”

Some estate agents say the oversupply and lack of buyers could result in prices of luxury clusters falling.

“It is one big market and market players compare prices all the time,” says Rode.

Pam Golding Properties confirms that overpriced clusters are not attracting many potential buyers.

However, chief executive Andrew Golding disputes the claims that there is an oversupply of upmarket cluster homes in Joburg’s northern suburbs.

“There are not many unoccupied clusters in these areas, where sales are generally running on track and meeting the expectations of developers,” he says.

Golding says there are many buyers who favour the cluster lifestyle and would not hesitate to invest in “realistically priced” units.

“So much so that we have been selling out 15-unit developments within no more than two to three months,” he says.

Standard Bank says there has been an increase in the number of bonds issued for cluster unit developments in the last three years.

Home loans director Leon Barnard says there is interest in units priced at more than R3-million. “There is strong demand for such developments and developers are able to sell their units.”

Article by: Simpiwe Piliso - www.sundaytimes.co.za