Salt River in Cape Town will soon welcome one of its biggest developments, The Spectrum, an exciting new lifestyle offering that has set out to create a variety of affordable urban apartments suited to all types of investors.
Launched to market in early November 2022 by Evo Property with micro-apartments, studio, one- and two-bedroom units on offer, The Spectrum has recorded sales of +-R140 million to date, translating into 40% of its units sold – and selling.
“We continue to see a steady influx of interested buyers, young and old,” says Emanuel Germanis, Principal of Evo Property, “and for the first time, the majority of our investors are locally based in Cape Town. In our experience, similar developments typically attract Johannesburg investor interest due to buyers wanting a piece of the Mother City. Salt River is not as well-known as the likes of Woodstock, Observatory, and the CBD so it has been phenomenal to see backing from Capetonians who see where the area is going.”
Over the years, the Salt River Precinct has remained in the shadow of its neighbouring suburbs, particularly Woodstock which has appreciated through immense investor interest and in turn, grown to become expensive. While Salt River fell behind somewhat, it has remained fairly affordable with property developers and landlords quickly realising that they could pass this value on to investors.
Now, through its rapid development and rejuvenation, Salt River has reached the stage where it is a healthy competitor to the likes of Observatory, Woodstock, and to some degree, the CBD.
“You will find as good quality in Salt River as you would in the CBD,” says Emanuel. “The area’s biggest attraction lies in its close proximity to a large tenant pool across all industries including education and commerce. It is also ideally situated near UCT and Groote Schuur Hospital which means that our investors shouldn’t struggle to secure tenants. Through the growth of this area, more amenities such as shops and restaurants as well as more investment in infrastructure will follow.”
Why The Spectrum?
Looking at the current market, in terms of what is available to rent in areas like Salt River, tenants can expect to pay between R4 500 to R7 500 per month for a one-bedroom apartment and for most, when viewing a smaller apartment, the first thing that comes to mind is whether the quality has been compromised.
“If we compare The Spectrum with a lot of the new developments on a larger scale, investors will find that its quality is on par with what is being built elsewhere,” says Kyle Vernes, an agent for Evo Property. “Tenants will receive uncompromised quality and our investors can expect rental returns of between 20% and 30% more than the R4 500 to R7 500 rental range per month. As an example, our smaller studios can be benchmarked in the R8 500 rental category (starting). The opportunity for a return on investment is greater.”
The Spectrum has been able to achieve this affordability, without compromising on quality, due to its number of its units which discounts the land and enables the developer, Dust Capital, to unlock purchase prices that many aren’t able to achieve. In new sectional title developments, units are sold on a per square metre basis and if you apply the rand per square meter price to the surface area of the development site, it is much lower than other comparable sites in Cape Town, therefore bringing down the purchase prices of the apartments.
“Our investors have scanned the market holistically and realised that The Spectrum is a notch above what they have found elsewhere in terms of an investment return,” says Emanuel. “When factoring in net investment returns (not gross returns) for a new residential development in Cape Town, 6% to 7% is considered good but with the likes of The Spectrum, you could see an +8% investment return, which doesn’t factor in things like capital appreciation – this is just merely on rental income.”
There also aren’t many other offerings in the immediate area that match The Spectrum’s amenities, says Kyle: “The general market seems to look for a holistic offering in the sense that you have accommodation catered for with recreational and work space factored in. With The Spectrum, there is coworking space, a gym and a pool with a deck area which is more appealing for tenants who are looking for an area where they can live, work and play.”
The Spectrum’s amenities include:
- Comfortable and contemporary designed apartments to maximise space.
- Back-up generator to counter the effects of load shedding.
- Onsite coffee bar for meetings.
- Onsite gym.
- Raised pool with picturesque mountain and harbour views.
- 24/7 security and access control.
- High-speed fibre connectivity.
- Onsite parking and storage facilities.
- Electric Vehicle (EV) charging station.
- NFT utility integration.
Micro-apartments versus studio apartments
The development’s micro-apartments have been sold with its one-bedroom units following suite, but this shouldn’t deter first-time buyers or investors from considering The Spectrum’s studio and two-bedroom units.
“The benefit of a studio apartment, relative to a micro-apartment, is that it provides a bit more space and your tenant pool – and achievable rental – will be slightly higher,” says Emanuel.
“The market has also seen a massive surge of micro-apartments over the past five years, but it hasn’t seen many new two-bedroom offerings which allows investors to diversify by multi-letting to students or young professionals, increasing the yield of their apartments.”
“Location is everything,” says Emanuel. “I have sold very few developments that reach The Spectrum’s tenant audience and if we look at who predominantly buys into Cape Town’s developments, its largely investor based. With its endless opportunities, The Spectrum is more than just your vanilla approach and it is significantly different to other offerings coming to market.”
Construction on The Spectrum is anticipated to begin towards the end of 2023’s first quarter with an eighteen-month development process. Occupation has been scheduled for late 2024.