There is considerable evidence indicating that, if given a choice, many Gauteng upper middle class people would like to retire to the Western Cape, preferably within 30 km of the Cape Town city centre. This was said recently by Bill Rawson, Chairman of the Rawson Property Group.
While this trend is obviously welcome to Cape estate agents, said Rawson, it does also present them with a real challenge – having to explain to Gauteng residents that their money will almost certainly buy far less floor space and quite possibly less sophisticated fittings and fixtures than it would in Johannesburg.
There are, said Rawson, two reasons for this: firstly, Johannesburg has in the last 50 years had more than sufficient undeveloped land to develop north, south, east and west of the city and development has therefore gone ahead at an unprecedented rate. Cape Town’s expansion has been limited by its sea boundaries and by its mountains which run the full length of the peninsula. Inevitably, therefore, development has often had to take the form of densifying and redeveloping existing sites rather than moving into new areas.
The second reason, said Rawson, is that whereas Gauteng property’s recovery from the recession has come off a very low base, in Cape Town the prices, although undeniably affected (especially in the upper property brackets), remained relatively stable when compared to those of Johannesburg. Today, therefore, they are still seen as expensive to a Gauteng resident.
Comparing two areas, Rivonia in Johannesburg and Rondebosch in Cape Town, said Rawson, will bear out what he has said.
“The two areas are comparable because their residents have similar incomes. In Rondebosch, Deeds Office analysts estimate that the average household monthly income ranges from R51,000 to R70,000 – and the figures for Rivonia are exactly the same.”
However, the average price of a freehold home in Rondebosch in 2013 was R2,792,200 and R1,111,000 for a sectional title unit, in Rivonia in 2013 the averages were R2,026,000 and R977,000 respectively – a very significant difference.
“Furthermore, anyone who knows these areas will testify that Rivonia’s freestanding homes are often 2,000 m2 to 4,000 m2 plots, in Rondebosch the average plot size is 500 m2 to 1,000 m2.”
Much the same comparisons can be made between two comparable, distinctly upmarket areas, Bryanston in Johannesburg and Constantia in the Cape Peninsula. Here, said Rawson, both have large plots (especially Upper Constantia and the better parts of Bryanston) and both are listed as having residents with household incomes of R75,000 plus per month.
However, in Bryanston in 2013 freestanding homes on average, according to Deeds Office figures, sold at R3,8 million and sectional title units at R1,130,000. In Constantia the average freestanding home in 2013 was listed as being R10,725,000, but is by Rawson’s estimate in the region of R6,2 million – still a very significant increase on the R3,8 million of Bryanston homes. This pattern, said Rawson, tends to be repeated in comparing any two upmarket areas in Johannesburg and Cape Town.
“The awkward truth, therefore, is that Gauteng residents do have to ‘downscale’ their property expectations when they move to Cape Town,” said Rawson. “However many will find this acceptable, especially as they know Cape Town property is continuing to appreciate at around 8% per annum.”