Middelburg under attack from developers and coal companies
Vacant development land is a much sought commodity in the coal mining town of Middelburg in Mpumalanga, according to Martin van Zyl, Pam Golding Properties' area principal.
"Speculators who previously purchased houses and clusters initially to let - then later place them back on the market at approximately 30 percent higher prices - are now turning to developing land for residential purposes," he says.
"Such is the demand, that a 40 ha piece of land just outside the town recently received three offers between R8,4m and R10,6m, with the seller holding out each time for an even higher price, despite the fact that each was the full asking price at the time. Another 8ha site in town recently fetched R6,5m. Unheard of outside the cities, such prices are indicative of the strong demand in Middelburg for land for development," says van Zyl.
Activity is also considerable in the higher price bracket of the residential property market. PGP recently acquired sole mandates on six houses ranging in price from R2,9m to R5,5m. Two of these sold during the past 45 days and we're seeing interest in the others, reaffirming the fact that this area has a strong top end market. Most of the demand fuelled by key players in the mining industry, as well as those successful in agriculture, given that Middelburg is considered one of the best areas in the country for maize and cattle farming.
Mining, according to van Zyl, has always had a significant impact on Middelburg, with the majority of businesses existing directly or indirectly because of the numerous mines in the vicinity.
New open cast coalmines are popping up virtually every month, which has major benefits not only for the local economy, but with unexpected indirect benefits too. Some farmers have benefited substantially as a result of this phenomenon, with a notable instance of a farmer whose land - while worth in the region of R5 000 per ha from an agricultural use was sold for mining purposes at R22 000 per ha. In fact, there are even instances of mining companies paying up to R60 000 per ha for such land.
"While this creates problems when marketing land for agricultural use - given the disparity in price between mining and agricultural usage - we are fortunate in Middelburg in the sense that we literally have farms of all kind around us. Some of the largest maize farms in the country are situated on the highveld, and these often double up as cattle farms.
But because of their profitability, van Zyl says, such farms rarely come onto the open market being purchased by a local prominent farmer. However, we do have a number of smaller farms available, mainly maize and potato farms of 350-800 ha.
To the north of Middelburg, PGP is active in the strongly agricultural Groblersdal area, where crops include citrus, grapes, tobacco, cotton, wheat, soya beans, sunflowers etc. "The Olifants River runs through this area giving good support to numerous small farms of about 100ha.These are popular, generally changing hands for approximately R1,5 million. We are also marketing game farms, and recently sold a 311 ha game farm for R7,3m," says van Zyl.
In line with the rest of the country, Middelburgs housing market has slowed in recent months. "However, we are currently experiencing an exceptionally strong demand for homes priced between R400 000 and R650 000. Developers are active in the area and we currently have a number of new cluster and town houses on the market in the price range from R780 000 to R1,1 million. While these are upmarket homes, the prices are underpinned by stand prices with a 1 200sqm stand easily fetching R500 000 in the better areas of Middelburg, a factor which considerably boosts the price of a newly built unit.
Van Zyl says a recent increase is apparent in movement from the local township into town, but the trend has been curtailed by the drying up of supply of properties in the R400 000 to R600 000. If we had more properties in that price range, the move would continue. While the local township has shown some activity, it is regrettable that banks are not finding true value in township homes, and although we had willing sellers/willing buyers for homes priced between R280 000 and R400 000, these transactions could not go through. Homeowners are understandably not willing to sell at prices which are not market related or realistic," says van Zyl.
Article by: Rodney Hayter - www.rodneyhayter.com