African buyers outshine Europeans in Atlantic Seaboard ROI race

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A survey of all free-standing house sales on the Atlantic Seaboard in the past 18 months has for the first time given a comprehensive snapshot of precisely where buyers originate and how much has been spent on the few kilometres of coastline that boasts the most expensive real estate in South .
The survey was undertaken by Lew Geffen Sotheby’s International Realty and includes every house sale that was concluded in Bakoven, Bantry Bay, Camps Bay, Clifton, Fresnaye, Green Point, Sea Point East & West and Three Anchor Bay – whether by an estate agent or through private sale.
In , 155 free-standing houses were sold in the surveyed suburbs collectively in 18 months from January 2013 to the end of June 2014, at a cost of nearly R1.715 billion.
The survey excludes sectional title transactions, which in suburbs such as Sea Point make up the bulk of especially the lower market sales.
The survey also demonstrates the extremely high value of property in the area – just 13 house sales in Bantry Bay over the 18-month period, for example, resulted in R176.65 million changing hands.
The main buyer market was African (79%) at 125 buyers, who spent R1.36 billion.
Mainland European buyers made up 12% and purchased property for R203m and the United Kingdom accounted for 7% for the buyers, spending R119.33m. The remaining 2% are from the UAE (1%) spending R21.15 million and the Far East, spending R12.375 million.
A further analysis of the African market shows that 95% (or 120 buyers) were South Africans who purchased property to the value of almost R1.26 billion. The other 5%, or R69.4 million, were shared by Angola, Congo, Zambia and Nigeria.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says mainland Europe remains a significant international source market for property sales on the Atlantic Seaboard.
“As far as the European countries are concerned, French buyers are tops with 31% of the region’s spend, which translates to R63.4 million in sales. Next is Switzerland at 16% buying property worth R32.25 million, followed closely by Belgium at 15% (R31.75 million) and Germany at 12% (R23.7 million).”
Geffen says the remaining 26% of mainland Europe’s buyers come from Denmark, , Sweden and the Netherlands, and they collectively spent R51.9 million.
“There’s no doubt, looking at those figures, that Cape Town is not only a desirable holiday destination, but that we’re also an immensely attractive investment prospect for foreigners who to come here again and again, or for those looking for a retirement destination.
“Some of the sales since the beginning of the year have been driven by the substantial depreciation of the Rand, which continues to make us an even more attractive international investment prospect. If you’re buying in Euros or Pounds, you’ll far more for your money in Cape Town than you would in most sunny places in Europe.”
Brendan Miller, Lew Geffen Sotheby’s International Realty Principal on the Atlantic Seaboard, says Camps Bay accounts for the greatest number of sales – 74 houses changed hands in 18 months at a cost of R656.9 million.
“That makes absolute sense given the layout of Camps Bay versus most of the other suburbs surveyed. The only suburbs in the survey that comprise predominantly free standing homes are Camps Bay and Fresnaye, which recorded 51 sales valued at R552.56 million.
“Houses in Camps Bay and Fresnaye tend to be older builds, often on large pieces of ground. Most are bought to renovate or demolish to make way for entirely new, bigger and more modern houses.”
Geffen says an analysis of the sales bears this out.
“In Avenue Des Huguenots, Fresnaye, a property was bought for R3.3 million during 2005 and sold during 2013 for R21 milliom showing a nominal return on investment of 26% per annum over 8 years.
“Another property in Head Road was bought during 2003 for R3.2 million and also sold last year for R26 million, showing a nominal return on investment of 22% per annum over approximately 10 years. These two properties were renovated by the owners before they were resold.”
Miller says the price bands of sales over the past 18 months also make for very interesting reading, because while the greatest number of sales was in the lower ranges, the greatest Rand value came from the higher-end properties.
“The highest Rand value of sales was generated in the R10m to R20m bracket. In that price range 48 properties worth R685.64 million were sold, while properties in the R20 million to R30 million bracket generated sales of R260.8 million – primarily in Clifton, Fresnaye, Bantry Bay and Camps Bay.”
According to Miller, the highest volume of sales was generated in the R5 million to R10 million bracket; 88 properties worth R633.55 million changed hands.
Says Geffen: “Buyers try to invest in the best location with the best views when they look for residential purchases on the Atlantic Seaboard, but not every property has these so they tend to sell quickly.
“The days of ‘flipping’ properties at huge profits are mostly over for now, but investors are happy to buy the best land, renovate and then live in there for a few years while their investment grows.”
Geffen believes the Atlantic Seaboard is likely to stay out of step with the remainder of the South Africa property market for the foreseeable future.
“If as a seller you demand R100,000 a square metre for a property anywhere else in the country you’d be widely ridiculed. On the Atlantic Seaboard it’s not only been done, but it’s fairly commonplace.
“As long as there is demand for properties on the Atlantic Seaboard you’ll see prices keep going up.”  (VENTURES AFRICA)[eap_ad_4]