Areas and Places

Atlantic Seaboard freehold houses’ market soars, ave price up R1.1m and 17% ave ROI on resale

Hard to believe perhaps in view of the economic climate, but the average price of freehold houses on the Atlantic Seaboard for the first half of this year is up by R1.1 million compared to the same period last year.

“This”, says Billy Rautenbach, sales manager for Seeff’s Atlantic Seaboard and City Bowl operations, “is despite a year-on-year dip of about 9% in the number of sales”.

While the market is no doubt toughening up, freehold houses are still hot sellers with sales since the start of this year already topping the R1.166bn value mark. The average sales price meanwhile stands at R13.1m (exclusive of the extraordinary R290m sale) compared to just under R12m for the first half of 2015.

Of the 91-odd sales recorded on Propstats so far for this year, only about 11%, or 10 sales fall in the R0m to R5m price band. Most of the sales have been in the mid-market areas of Green Point and Sea Point. Houses in this price sector is very difficult to find and basically sell almost as soon as it hits the market according to agents, Jessica Rother and Debbie Koping.

“The R5m to R10m price band was by far the busiest, accounting for almost half of all sales with about 40 units sold at an average price of around R8m, compared to R7.6m during the same period last year.The bulk of the sales have been in Fresnaye (13) and Camps Bay (10) and a single sale in Clifton”.

The next price band, the R10m to R20m range account for about 30% of all sales (28 units) and an average price of about R13.5m, down somewhat from last year’s average of R14.1m. The bulk of the sales have been in Camps Bay (12 units), followed by Fresnaye (6 units) and only 2 sales in Bantry Bay.

Notably, there were also 5 sales in Green Point and 3 in Sea Point, says Rautenbach. This clearly points to a rise in the value of freehold houses in these two areas.

Any well-priced freehold house below the R15m price mark in the Fresnaye and Bantry Bay area still attracts a lot of attention according to agent, Karen Lurie. In Fresnaye for example more than 80% of sales were below this price mark and almost half of all these sales were concluded within a month of listing.

The super-luxury R20m-plus sector of the market has been a little more active with 15 units sold compared to 13 sales for the same period last year.

“The total value generated of R755.291m, accounts for more than half of the value of all freehold house sales on the Atlantic Seaboard this year”, says Rautenbach.“The average price for this sector stands at R33.2m, slightly up on last year’s average of R32.5m”.

The highest number of sales of R20m-plus were made in Camps Bay (7 units) followed by Bantry Bay (3 units) and Fresnaye and Clifton at 2 sales respectively.

Luxury market specialist, Lance Cohen, says that although the demand at the top end of the market is now quite discerning, the level of confidence remains high as demonstrated by the fact that prices of R100m to just under R300m have now been achieved here.

Cohen says that the mini-boom of 2013 to 2015 pushed the top end of the market to a whole new level of desirability and value. Investors are now so confident that the luxury villa in Nettleton Road sold early last year for R111m is now back on the market for R150m and, says Cohen, the value is there.

“The R100m-plus sector of the market that is now the real cream on top of the area. Of the around a dozen homes on the market priced at R50m-plus, only about four top the R100m mark, two a piece in Clifton and Fresnaye”.

These homes have taken the area to a whole new level of excellence with world-class architectural design, magnificent sea views, well over 1000sqm in floor space and just about every luxury addition that you can imagine. It is therefore no surprise that buyers are willing to pay substantial prices.

“A Fresnaye listing at R125m demonstrates this well”, he adds.“The multi-storey villa towers above the ocean and compares with Hollywood celebrity-style homes. It includes a magnificent indoor water feature with a floating staircase above it, four bedroom suites, the main with a Hollywood-styled walk in dressing room and a platform-set bath. There is also a hi-tech cinema, bar-room, several living areas, sea-facing terraces and a magnificent rim-flow swimming pool suspended above the ocean”.

Rautenbach says that while freehold house sales only comprise about 20% of the overall market in unit terms, it accounts for about 40% of the total rand value generated since 2000. Freehold houses also still achieve the highest prices on average.

An analysis of Lightstone transfer data reveals that in the 2000 to early 2015-period, some 5525 freehold houses sold to the combined value of just over R26.725bn. The 2001-2007 period were the real boom years with between 378 to 530 houses sold annually.

In the post-2007/8 period, the market peaked in 2014 with 339 sales worth just over R3.071m. The average sales price of a freehold house meanwhile more than doubled from just R5.531m in 2007 to about R13.1m currently.

“For sellers, it has been a rather fortuitous period since 2007 with plenty of buyer interest, good prices and an average ROI (return on investment) of around 17% per annum over an 8-year holding period”.

The mid-market areas performed best overall with Three Anchor Bay sellers achieving the highest returns (21% over 7 years) followed by Sea Point (18% over 8 years), De Waterkant (17% over 8 years) and Green Point (16% over 8 years).

Bakoven meanwhile achieved 17% and Camps Bay 14%, both over a 9-year period. Fresnaye achieved 17%, Clifton 16% and Bantry Bay 15%, all measured over an 8-year period.

Rautenbach says that while the reasons for the stellar growth in demand and values, the resort lifestyle and fabulous views are well documented, the statistics certainly attest to the fact that the confidence in the area is not misplaced.

As always though, she cautions that these are average rates and the returns realized by sellers depend on a range of factors including the price paid and the holding period.