Areas and Places

Demand is strong in Strand

The purchase by the well-known entrepreneur, Johann van der Merwe of the Rawson Property Group’s Strand franchise (along with the Somerset West and Gordon’s Bay franchises) in 2004 has proved to be one of the turning points in this group’s history, says Tony Clarke, Managing Director of the Rawson Property Group.

“In 2004,” said Clarke, “the Strand property market was not something to write home about: it was, to say the least, lacklustre. From the time that the van der Merwe family took over the franchise here however, it showed a steady improvement — until the 2007/2008 recession when it fell back drastically — only to flourish again from 2010 onwards.”

Today, said Wouter Joubert, a co-franchisee and manager of the Rawson Property Group’s Strand franchise, any property buy in Strand is, in his view, “about as good an investment as it is possible for the man-in-the-street to make”.

Prices of both sectional title and full title homes here, said Joubert, are rising by ± 10% per annum and demand is so strong that his franchise has never quite enough stock to meet it. When a home is correctly priced it sells within two weeks here.

Sectional title units at Strand, with the exception of those on the beachfront, said Joubert, are generally in a price range of R280,000 to R800,000, with an average price of R550,000. “The luxury units on the beachfront can, however, sell for up to R5 million each.”

The fastest selling full title homes at Strand are priced in the R650,000 to R1,500,000 bracket, with the average price being R900,000.

“Anyone familiar with the Cape residential property scene will realize at once that prices at this level are the exception rather than the rule in the middle class suburbs of Greater Cape Town,” said Joubert. “Along with Strand’s convenient position in relation to Cape Town, Bellville and Stellenbosch, it is the affordability of homes here that is fuelling the very strong demand.”

Comparing Strand’s prices with those of other nearby precincts, especially Somerset West, Stellenbosch, Paarl and perhaps Durbanville, said Joubert, adds force to his argument. In general, homes in the suburbs mentioned are priced at around 30% more than they are in Strand.

This Rawson Property Group franchise now employs ten selling agents and Joubert estimates that his team now controls 40% of Strand’s property market. This year they have sold just over 80 homes and are on track to achieve at least 160 sales by the year-end. This target is definitely realizable, he said, because in the second half of the year sales traditionally exceed those of the first half. The 160 figure itself, he commented, would represent a 25% increase on this franchise’s sales for 2013.

Any review of Strand property must also make mention of the Strand beachfront where, it has been said, 70% of the buildings have been renovated or replaced, often with high rise complexes, within the last ten years. Prices here and in the one or two roads behind the beachfront, said Joubert, can be anything from R1,100,000 to R4,000,000 with, as mentioned, luxury high rise apartments going for as much as R5 million.

“Although this area has always been very much ‘in’, from a sales point of view it was a no-go and dead precinct from the onset of the recession until very recently. Now we are seeing clear signs that a recovery is on the way and to capitalize on this we have appointed two dedicated agents to serve this area. We are now confidently predicting that anyone buying here will be buying one of the fastest appreciating assets in the entire Cape property scene,” said Joubert.

On the rental front, the story is much the same – successes all round. Prices are rising (at 10 to 15% per annum) and rents at Strand can be anything from R2,500 to R20,000 per month. Nevertheless, average rentals for the area are still only from R3,500 to R6,000 per month, again very affordable by Cape standards.

So where does this strong demand for property at Strand originate?

Discussing this, Joubert made three points: firstly, those who live here tend to retire here. They may downgrade to a retirement complex or a retirement estate, but they are unlikely to go elsewhere. Secondly, the area is attractive to many who live beyond the Greater Cape Town borders and are now moving into them, very often in search of work. This influx, he said, although largely undocumented, has been massive. Thirdly, foreigners, especially Germans and British, like to buy here because of Strand’s climate, its long beaches and warm sea waters are exactly what ‘swallows’ from Europe look for in a southern hemisphere property – and the close proximity to the Winelands and world class golf courses is another big draw card. For such overseas buyers, said Joubert, today’s international exchange rates make a purchase of, say, R2 million very inexpensive indeed.