A popular destination for holidaymakers since the 1960’s, the canals at St Francis Bay in the Eastern Cape were thrust into the spotlight in November 2012 with a devastating fire which destroyed 76 homes.
Eighteen months later, St Francis Bay has experienced a building and property boom. More than 40 of the homes which were destroyed have already either been rebuilt or are currently under construction, says Richard Arderne, area principal for Pam Golding Properties (PGP).
“Sales in the market in general have been good, increasing substantially since the fire, which ended a few years of subdued sales. However, prices remain under pressure, with sellers still outnumbering buyers.
“Positively, for the 12 month period to February 2014, we have doubled our turnover to R70 million compared with the previous year, while this current financial year is looking even better after the first quarter (March to May). Furthermore, we have completed 12 sales to the value of R23 million in June, our best trading month since October 2008 – when we sold a canal house for R21 million. We find the trend is that buyers visit in summer and commit to buying decisions during the winter months.
“In addition, the demand for canal plots has soared. The canals have been a huge success, providing 7km of meandering waterways which are flushed twice a day by the ocean tides, ensuring that the water quality is always excellent. This is further evident by the fish and marine life which abound in the canals, which provide a sheltered safe playground for all ages for swimming, canoeing, boating and fishing as well as providing easy access to the Kromme River, which is navigable for 14km, and to the sea. The canals accommodate boats of up to 7m, with homeowners able to moor their boats at the end of their gardens – for some that is as close as three metres, others about 20m. Other nearby features include two 18-hole golf courses, world class surfing, the private harbour – Port St Francis, and the village itself with an array of shops and restaurants.
“The tempo of sales of canal plots has increased fourfold since the fire, which is not surprising as buyers have had and still have a once-off opportunity to choose from a wider selection of plots than for many years. In the year and a half since then there have been 22 such sales (across the market), after only 10 canal plot sales in total in the three years preceding the fire. The recent canal plot sales were mainly in the price range from R900 000 to R2 million, with two further sales priced at R2.9 million for a north-facing stand in the Marina Village estate and R3.6 million for a plot on the ski canal with a sea view.
“However,” says Arderne, “the average price of a canal plot has dropped to R1.5 million after averaging R2 million before the fire and we now have more stock of canal plots than previously, with 20 plots marketed on a sole mandate by Pam Golding Properties, most of which are priced from R950 000 to R1.8 million, with a few over R2 million and one large, prime plot for R7.7million. Having said that, the canals have certainly outperformed the rest of St Francis Bay, for example 42 of the 64 properties sold for over R3 million since January 2011 were canal properties.”
The demand for canal plots – especially those at entry level prices, continues and PGP’s four most recent canal plot sales have achieved prices of R950 000, R1.1 million, R1.5 million and R2 million. Since the fire, 11 plots have sold under R1.5 million, indicating a growing appetite for this price range. Canal plots range in size from about 500sqm to 2000sqm, averaging at about 1000sqm.
Arderne says many buyers are considering building their own homes, despite increased building costs of typically R8000 to R12 000 per square metre for canal houses. “There are several reasons for this preference – firstly, although there are a number of canal houses for sale, many are over-priced and many are dated in finish and design. Today home buyers want open plan living areas and bedrooms with en suite bathrooms, so they would rather build a modern style home to suit their own requirements and taste, and where they can also incorporate energy saving features.
“Importantly, there will be no further extensions to the canals, which makes a home right on the water a desirable option – particularly now while prices are still low – with sound medium to long term investment potential due to the scarcity factor in the future. Of the 517 erven on the canals, there are only 92 vacant plots left, 30 resulting from the fire. The number of vacant plots is reducing all the time as new homes commence construction, and is expected to drop to about 70 within the next 12 months,” he says.
“Further to this our holiday rental division is experiencing huge demand for the forthcoming December festive season, particularly for canal homes, and we are substantially ahead of last year. Parents are persuaded by their teenage children that St Francis is where they want to spend their holiday, partly for the outdoor pursuits and partly for the various music and party venues which are held in a secure environment at Cobs Cove, Billy’s Beach and the Ruins.
“Last year we booked 85 holiday rentals and this year is expected to far exceed that, while the value of the rentals appears to be increasing rapidly as holidaymakers book longer stays and opt for larger and more expensive houses – often sharing the house with another family and friends.”
Arderne adds that most home owners tend to optimise rental income by imposing minimum 14 night occupancies. Rental rates vary from about R2000 to R7000 per day per home, which range from two bedroom cottages in the village to six bedroom homes on the canals or lovely beachfront homes in Cape St Francis, apartments at the Port and houses in St Francis Links, among others.