Although the exclusive Cape Town Atlantic Seaboard property market has remained largely impervious to the current economic downturn, there has been an a very small shift, with the freehold sector ceding a fraction of its market share to the flourishing sectional title sector.
This is according to Brendan Miller, Lew Geffen Sotheby’s International Realty Atlantic Seaboard and City Bowl CEO, who says while this may in part be a barely perceptible nod to the market slump, there are several other key factors which are driving the expansion of the sectional title market, including a growing number of first-time buyers, increased demand for lock-up-and-go convenience and ongoing densification in response to the growing demand for property.
Miller says the rapid development of sectional title properties across all market segments is not only changing the property landscape of the Atlantic Seaboard but has also been a prominent driving force in the market’s consistent strength.
He says contrary to the current national trend, the apartment market here is still much a buyer’s market and they find that correctly priced properties are usually snapped up within two weeks of being released onto the market.
He says this has led to a dearth of sale stock, especially in the lower to mid-market segments, with property values spiralling upwards and record sales prices being achieved.
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Simony dos Santos, Sectional Title Area Specialist for Lew Geffen Sotheby’s International Realty in Green Point, Sea Point and Three Anchor Bay, says buyers are scrabbling for apartments in these suburbs as they still offer an accessible, albeit increasingly scarce, entry point into this exclusive market.
Dos Santos says a modern studio or older, one bedroom apartment in Sea Point, Green Point and Three Anchor Bay can still be bought from around R1.7 million, although entry-level properties priced between R2 million and R2.5 million are now more common.
“Two bedroom and three bedroom flats generally start at R2.8 million and R3.6 million respectively, depending on condition and location, while a budget of between R4 million and R8 million offers buyers a much wider variety, from beautifully restored apartments in older blocks to modern units in newer developments.”
Citing Lightstone data, dos Santos says during the 12 months ending 31 May, 150 sectional title properties changed hands in Green Point, 394 flats were sold in Sea Point and 80 changed hands in Three Anchor Bay. She says in all three suburbs, the R1.5 million to R3 million price band recorded the most sales.
Jolene Alterskye, Sectional Title Area Specialist for Lew Geffen Sotheby’s International Realty, says although they are seeing the most activity in the lower and mid-market sectors, it is at the top end of the market that they have seen the most significant growth and transformation in recent years.
She says preparation for the 2010 World Cup spilled over into these suburbs, with extensive upgrades and exponential development boosting the top-end of the market.
Nowadays, she says it’s not uncommon to see listings for apartments priced between R14 million and R19 million, with several sectional title properties now qualifying for elite trophy home status, which was traditionally the preserve of the more upmarket suburbs like Clifton and Bantry Bay.
Another suburb to benefit from the development surge prompted by the World Cup is Mouille Point.
Miller says for many years Mouille Point was regarded as the poor relation on this exclusive strip, and its dramatic transformation is not unlike the classic Cinderella rags-to-riches tale.
“In less than 10 years, the average apartment sale price in this small suburb grew by almost 350%, from R1.8 million in 2007 to R8.09 million by the end of 2015, during which properties seldom spent more than two months on the market and the average discrepancy between asking and selling piece was only 5%”.
According to Miller, in the preceding 12 months ending 31 May, 24 of the 47 apartments sold were in the R3 million-plus bracket, with an average sale price of just under R6.4 million, while only 15 sales were in the mid-market price band of R1.5 million to R3 million.
Another Atlantic Seaboard suburb which has experienced a dramatic turnaround in recent years is Bakoven, which was once seen as a sleepy extension of Camps Bay if it was noticed at all.
However, rapid sectional title development has catapulted this hamlet into the limelight and it now not only commands the highest rentals in South Africa, but is also setting the bar in terms of sales prices achieved on the Atlantic Seaboard.
“Last year, six units in the recently developed Boulder Apartments were sold at an average price of almost R18 million apiece, with the two most expensive apartments fetching R33.6 million at R78 209 per square metre and R30 million at just under R70 000 per square metre.”
Long regarded as the jewel in the crown on the Atlantic Seaboard, Clifton apartments have always commanded the highest prices and rewarded investors with the best return on investment, but the crown prince is now sharing pole position with neighbouring Bantry Bay.
According to Lew Geffen, Chairman of Lew Geffen Sotheby’s international Realty, Bantry Bay has benefited greatly from the ongoing development of its thriving sectional title market.
He says Deeds Office records show that Bantry Bay has increasingly dominated this market since 2010, with a 30% market share and 314 apartment sales recorded at the end of April 2016, achieving a combined value of R1.6 billion.
Geffen says it’s closely followed by Clifton where 143 sales realised R1.3 billion and Camps Bay with 222 sales fetching R1.045 billionn during the same period.
“Upmarket apartments in the suburb are now outperforming the solid housing market and, measured in 2015, displayed an outstanding nominal 18% ROI per annum over eight years.”
According to Geffen, Bantry Bay’s exponential market growth is especially evident when measured over the last six years. He says the sectional title market performed brilliantly during this period, with the highest average nominal ROI of 21%, followed by Camps Bay with 16%.
Of the 46 apartments sold in Bantry Bay during the past 12 months, 24 transactions were at the upper end of the market in the R3 million-plus price band at an average sale price of R7.62 million.
Bantry Bay may have snuck up on Clifton in recent years, but Clifton still commands the highest prices as the exclusive enclave has the highest number of apartment blocks with direct ocean views and, in many cases, access to its famous beaches.
Eleven of the 14 sales during the past year realised an average sale price of R15.05 million while only three sold for less than R3 million.
Although Camps Bay has seen less sectional title development than its fellow upmarket neighbours, this market segment is active and, of the 29 apartment sales during the 12 months, 26 were at the upper end of the market at an average sale price of R7.13 million.
Geffen says apartment living on the Atlantic Seaboard will always be an attractive option, and the sectional title market will continue to perform well as buyers are prepared to pay a premium for top-end lifestyle properties in a well-run city within close proximity to world-class amenities.