Sectional title property, especially more compact units that offer security and good access to transport infrastructure is hot property across the Johannesburg and Pretoria areas and make for excellent investments according to Seeff’s branches.
Apartments, townhouses and small cluster homes are an excellent choice as a starter home for first time buyers and can later be retained as a buy-to-let investment property. “That”, says Samuel Seeff, chairman of the Seeff property group, “makes this property type an excellent investment”.
Lightstone data shows that sectional title make up 34% (59 935 units) of the total market stock for Johannesburg, yet accounts for almost half of all transactions last year at an affordable selling rate of around R800 000 for a two-bedroomed unit in the middle class suburbs.
The Pretoria (Tshwane) metro is home to about 40% sectional title properties, yet accounts for 55% of all transactions last year and activity continues to outstrip full title this year. Since 2013, the sector has surged year-on-year, now outpacing full title, according to Seeff. The metro boasts a similar average price of around R800 000 for a two-bedroomed unit in the middle class suburbs.
Affordability is a big driver of the sector according to Seeff’s branches. In the greater Johannesburg and Pretoria area, you can for example still invest at an affordable rate of between R600 000 and R1.3 million in very good suburbs.
The Randburg area has a busy sectional title sector, accounting for 53% of activity even though it only comprises 42% of all stock. Pat Evans, Sales Manager for Seeff Randburg notes that most of the north western suburbs are hot spots for sectional title buyers and investors.
In North Riding for example, the sectional title sector up to R1.5m is active. The average selling price is around R1.08m and for luxury units around R2.09m. The affordability, means that about 46% of buyers fall into the Millennial demographic.
Two-bedroomed apartments sell for about R800 000 to R1m on average, depending on the location and finishes and can fetch rentals of around R6 000-R7 000 per month on average
Steve van Wyk, managing director for Seeff Centurion says that while sectional title account for just over 44% of all market stock, it makes up 60% of transaction volumes in the Centurion area. The average selling price ranges from around R700 000 to about R1.8m for the luxury complexes.
Centurion offers a very strategic location and many affordable options for buyers, he says. It is also a high demand area for rentals. Ananda Ludick, an agent with Seeff Centurion, for example points to the suburb of Monavoni as an excellent option for sectional title buyers and investors.
She says that about 70% of total market stock comprise of sectional title located in complexes and estates and at an average selling price of around R700 000 for an apartment and R1.34m in an estate complex, it is very affordable. “Hence”, she adds, “about 57% of recent buyers fall into the millennial buyer demographic. Apartment rentals average at around R5 920/month and up to R10 100/month for a unit in an estate complex”.
The agent says that part of the draw-card is the excellent location and good access to Pretoria and Sandton combined with access to superb schools and facilities and amenities including an Ernie Els golf club nearby.
In the east of the city too, sectional title property is gaining traction, according to Gerhard van der Linde, Managing Director for Seeff Pretoria East. In the suburb of Equestria for example, sectional title property now accounts for 76.2% of total market stock.
“The affordability is a big driver of the demand”, says Anel van der Schyff, a Seeff agent for the area. “Consider for example that you can still buy for between R850 000 and R1.05m on average, despite the fact that property values have grown by about 10% annually over the last few years”, she adds.
“Almost half of all sales were to millennial buyers, mostly young professionals and families who are getting excellent value for their money”, says van der Schyff. “Here too, you have access to excellent facilities and amenities including good schools and you are close to the N4 Highway and Lynnwood Road for access to the N1”.
A two-bedroomed unit sells for about R650 000 to R800 000. Rental rates tend to range from about R6 000/month to about R8 500/month for a top end unit, equating to very attractive yields.
A benefit of investing in a new development is that there is no transfer duty, but buyers also qualify for exemption from transfer duty for up to R900 000 of the purchase price, a significant advantage for first time buyers and investors.
“Compact living and security along with the affordability of this type of housing makes it a winner for residential buyers, but also for buy-to-let investors”, says PG van der Linde, adding that the demand for rental accommodation will likely to increase further as the economic outlook weakens. “This will further strengthen the demand for sectional title property”, he concludes.