Spiraling demand for secure apartments in Vredehoek is fueling investment in this quiet City Bowl suburb, with developers scrambling to cater to the growing market by renovating older blocks or demolishing old houses and replacing them with small complexes.
Sue Alison, Area Specialist for Lew Geffen Sotheby’s International Realty, says the market in Vredehoek is very vibrant at the moment with home owners occasionally achieving sale prices above their asking prices “as we saw recently when three buyers were bidding for one property”.
A significant segment of this local demand comes from buyers weary of Cape Town’s increasing traffic congestion, commuting times that grow ever longer and the expense associated with hours spent idling in bumper-to-bumper traffic every work day.
Allison says: “First prize for developers is a row of older homes they can replace with multiple dwellings, so it can easily become a bidding war.”
Denise Schmidt, also of Lew Geffen Sotheby’s International Realty in the City Bowl, says a major driving factor in this market is the high demand for rental properties, with owners realizing excellent returns on their investments.
“Typically, a two bedroom apartment can fetch between R14 000 and R18 000 a month, with brand new modern two bedroom flats even realizing rentals of up to R25 000, especially if they include secure off-street parking.”
There is a growing availability shortage across the board in the area in the sales and rental markets as the stock levels of both houses and apartments cannot keep pace with supply.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says this spike in demand is clearly illustrated by an analysis of Propstats sales data.
“In 2012, the average sale price of an apartment in Vredehoek was R1.2 million after an average listing time of 72 days. With a steady increase in demand and property values rising, the average sale price climbed to R1.66m in 2014, with few flats remaining on the market for more than a month and many selling within a week of listing.
“However, within just two years – to the end of 2016 – the average apartment price skyrocketed to R2.8m, which ultimately translates to a very healthy nominal year-on-year increase of 13.7% over five years.”
The rising demand for sectional title homes in the area has inevitably impacted the already buoyant freehold sector, especially at the lower level of the market where older homes are highly sought after by both private buyers and developers.
Geffen says further analysis of the area’s Propstats sales figures clearly demonstrates how this sector has grown in leaps and bounds since 2012 when the average house price was an accessible R2.99m.
“By the end of 2014 the average sale price of freehold homes in Vredehoek had increased by 25% to R3.75m, followed by a whopping 34% increase over the next two years that saw 2016 end on an average freehold price of R5.04m.”
Schmidt says there has also been a noticeable increase in renovation in the suburb in recent years as investors have become aware of the value of owning property in the City Bowl.
“The spike in residential prices in the area has resulted in more buyers purchasing older properties within their budgets and then renovating over time, and we are also seeing existing owners sprucing up their homes to increase the values.”
However, it’s not only the potential return on investment that draws buyers, but also the unique lifestyle that residents of Vredehoek enjoy.
Says Alison: “Vredehoek is an extension of the vibey Gardens, but with a more tranquil and laid-back village atmosphere. Young professionals and families are especially drawn to the suburb, and on any given day most cafes in the Derry Street area buzz with residents who work remotely from their offices on laptops and moms meeting for coffee”.
“Come evening-time families with dogs and children enjoy the well-maintained parks, and joggers and cyclists emerge en masse to take to the quiet suburban roads.”
Another draw card is that Vredehoek is packed with amenities, many within walking distance for most residents including several good schools, a variety of medical practitioners and a wide choice of cafes and restaurants, with Gardens Centre also very close by.
Alison adds: “It’s one of few suburbs in Cape Town where one can get by without a car, because MyCiti rapid transit buses service the suburb well and the amenities of the CBD and Gardens are within 15 to 25 minutes’ walk for most residents”.
“With Cape Town’s increasingly congested road network there is no doubt that the value of property in the City Bowl will keep rising. According to the Cape Town Central City Improvement District (CCID) 30% of the metropole’s workforce is employed in the CBD, including some 23 000 civil servants in more than 100 government services offices who attend to nearly 30 000 members of the public each day”.
“The CCID also noted in its most recent State of the Cape Town Central City Report that there were some 2 500 private sector businesses located in the CBD, with the majority of their employees facing onerous commutes each day. As the CBD continues to develop and expand, coupled with the on-going wave of semigration to Cape Town, residential property in the City Bowl can only climb in value in the medium to long term.”