Several emergent trends that have been germinating along the Atlantic Seaboard in recent years have now taken root and triggered significant market shifts along this sought-after coastline, with one in particular literally changing the property landscape.
During 2015 it became evident that the once-dominant freehold segment was increasingly ceding its market share to the flourishing sectional title sector. However, last year the latter dominated the market with the lion’s share of sales across the Atlantic Seaboard.
Brendan Miller, Lew Geffen Sotheby’s International Realty Atlantic Seaboard and City Bowl CEO, says this is clearly evidenced by recent Propstats data: “In 2015, there were 466 sectional title sales with a total value of R2.57 billion and 196 houses worth R2.4 billion changed hands during this period”.
“However, during the first 11 months of 2016 ending 30 November, 475 sectional title sales worth R2.136 billion were concluded and just 145 house were sold, but at a combined value of R2.13 billion.”
He attributes this notable shift to several key factors: “A growing number of first-time buyers, increased demand for lock-up-and-go convenience, and on-going densification in response to the growing demand for property are all driving the expansion of the sectional title market.”
Miller adds that what has remained constant across the board is the steady growth in property values, which saw the average apartment sale price on the Atlantic Seaboard increase from R5.3 million in 2015 to R5.47m in 2016 and the average house price increase from R12.28m to R14.73m during the same period.
However, whilst the entire Seaboard residential belt shares the status of being one of the most stable markets in the country, there are very different markets within the area that have all responded uniquely to the prevailing economy.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says: “The luxury price band is generally more resilient to economic fluctuations as it tends to operate independently of general market trends, continuing to offer solid returns well above the average property price inflation rate when realistically priced”.
“However, this top price band is not completely impervious and Lightstone data reveals that certain suburbs did enjoy more market activity than others during 2016 with median prices maintaining a solid upward trajectory, while sales in some suburbs were more subdued”.
“Since 2011 the Camps Bay housing and sectional title markets have enjoyed solid year-on-year median inflation, and despite the subdued economy, record prices were achieved in 2016.”
In 2015 the median apartment price increased by 3.2% from R5.75m in 2014 to R5.93m, while during the same period the median price of houses grew by 9.6% from R9m to R9.87m. Last year saw a notable spike in the freehold title median prices that reflected a year-on-year increase of 20.1% to R11.86m and apartments rose by a whopping 47% to R8.75m.
Clifton’s market also fared well in 2016, making an excellent recovery from the sharp dip it took the previous year, says Geffen.
“The median price of apartments shot up by almost 55% from R7.25m to R11.22m and houses increased by 22.5% from R14.4m to R17.6m.”
Fresnaye’s sectional title sector also showed healthy growth with the year-on-year median price rising by 27.6% from R3.8m to R4.85m, but the housing market flat-lined with the median price edging upwards by only a few Rand.
And, after basking in the limelight in 2015, Bantry Bay took a knock all-round with the median price of houses and apartments dropping by 12.5% and 32% respectively.
In the more accessibly priced suburbs from Sea Point to Green Point, on-going regeneration and construction remained the order of the day with high demand for apartments in new developments.
According to Michael Meade, Area Specialist for Lew Geffen Sotheby’s International Realty from Sea Point to De Waterkant, the only notable change during 2016 was a decline in the mid-market sector, which he attributes to inconsistent pricing from unrealistic seller expectations.
“We are finding that many sellers in this market are resolutely asking for the highest Rand per square metre being achieved in the area, which is usually only achievable in luxurious new developments. They end up jumping between agents and wasting time, as they are eventually forced to reduce their asking price in order to make the sale.”
Another trend that wove itself deeper into the fabric of this vibrant stretch in 2016 was mixed-use developments, which have become a significant element of Sea Point’s on-going refurbishment.
Chad Shapiro, Senior Commercial Broker for Lew Geffen Sotheby’s International Realty in the CBD, City Bowl and on the Atlantic Seaboard, says: “The real estate sector as a whole has benefitted from the balanced combination of fixed and variable tenants who are increasingly less dependent on location and tourism.”
Prominent projects include the extensive redevelopment of The Ritz Hotel and the old “Nedbank” Building at the end of Main Road.