Property - Looking back at 2018 and forward to 2019 Expected Trends and Opportunities
Category Property News
Despite 2018 bringing more than its fair share of political upheaval, as well as economic uncertainty and woes, the property markets still experienced some notable successes.
CAPE TOWN ATTRACT LUXURY PROPERTY BUYERS
DG Properties says that despite challenges faced in the luxury property market in 2018, Cape Town remains one of the cities that are attractive to international investors when they decide on where to buy luxury real estate. This is backed up by the Wealth-X Global Property Handbook which says that Cape Town ranks 37th - one below Dubai at 36th.
This desirability has also been witnessed in the holiday rental sector in 2018, with DG having achieved one of their highest short-term rentals ever, with a staggering single rental of just under R1 million for four nights on the Atlantic Seaboard in mid-winter. The booking, which required two luxury homes in Clifton (in one of the most expensive residential streets in South Africa) to accommodate the full group of international holidaymakers, cost a total of R960 000.
"We believe that in 2019 the Atlantic Seaboard and City Bowl areas are going to offer the property investor a number of interesting opportunities which will be hard to pass up," says DG. "With the sluggish Rand, and pressure in the local market, luxury properties will also seem increasingly attractive to overseas investors in terms of the discounts to be had from serious sellers."
THEY MAY BE SMALL BUT THE DEMAND IS BIG
Other areas of the property market saw success in 2018. According to DG, the arrival of the micro-living trend to Cape Town's CBD has seen a flurry of buying activity, as these developments offer entry-point property ownership opportunities.
"01 Albert Road in Woodstock broke ground in 2018. This micro living development offers units that range in size from entry-level 21 square metre studios, at a cost of R1,095 million, to 75 square metre two-bedroom units, at a cost of up to R2,650 million. Sales of these units have been robust as at the prices they offer an attractive opportunity for people who might not otherwise be able to get a foot on the Cape Town property ladder."
"In addition, SA still has a significant shortage of decent housing close to city centres and other employment hubs because of the rising cost and inconvenience of travelling to work. 01 Albert Road is situated in Woodstock so offers an easy commute to work in the city centre." The demand for well-positioned, well-appointed and well-priced micro-living apartments is not going to easily wane and the trend will continue strongly in 2019 and beyond.
NEW DEVELOPMENTS ATTRACT BUYERS FOR A VARIETY OF REASONS
Another area that has seen robust activity, and which we also anticipate ongoing demand for in the year ahead is new property developments," this is according to DG Properties, who says that new developments are booming as developers see the demand for these properties among consumers.
DG explains that some of the reasons that new developments are so popular is that they incorporate the latest in design, features and trends and buyers can usually work with the developers to customise the unit/house. "The development industry is also a barometer on the value of property per square metre, as it is well regulated and banks only finance property based on very stringent costs to the developers - so developments provide a benchmark on the value of the property and the cost of building. The completion of developments is dependent on very realistic real economic factors and all of this guides the price asked for property within new developments".
"Investing in property within new developments serves as a financial hedge as buyers can purchase off plan (paying only a deposit to start) but only have to pay the balance once the development is completed in months/years time. In this period the investor makes a profit - before they even take ownership of the property because by the time the development is completed the price of property will have gone up. There is also no transfer duty to be paid on new developments," says DG, who goes on to advise that much like the micro-living trend, developments in urban areas are also a good investment as they allow investor buyers to own property in central areas that have limited space left for developments - such as the Cape Town City Bowl or the Atlantic Seaboard - making these developments all that much more valuable.
LOCATION, LOCATION, LOCATION
DG Properties advises that regardless of economic issues or political influences, some areas will always outperform others in the property market as they fulfil the demand for location.
"Suburbs that offer residents a quick commute to work, access to a flourishing business hub, leisure activities and easy access to good schools are always in demand and going forward into 2019 this will remain a trend, with houses in these areas being able to command higher prices. Examples would be Constantia and Claremont in Cape Town."
"There are other areas which also offer access to good schools and work, but better value-for-money property such as Cape Town's suburbs of Blouberg and Table View."
OTHER TRENDS THAT WILL AFFECT THE REAL ESTATE MARKET IN 2019
According to DG Properties, there are other emerging trends that are set to affect the real estate market in the near future.
HOME AS OFFICE, BUSINESS OR SERVICE - THE 4TH INDUSTRIAL REVOLUTION
One of these is the increasing popularity of people working from home or running their own businesses from their homes. "The blurring of live-work boundaries and changing needs are affecting the kinds of homes buyers want, especially as more and more people work remotely or are self-employed. This creates a need for workspaces in the home," says DG.
TECHNOLOGY
"Major technology affecting real estate is virtual reality, which is already being used to allow buyers to remotely view properties for sale or as-yet, un-built new homes." According to DG, in the future, the same technology could conceivably be used as an interactive way of allowing buyers to participate in the design of their new homes."
THE AFFORDABILITY FACTOR
"This ties back to the emergence and popularity of the micro-living trend," says DG. "A trend that will continue to affect property in 2019 and beyond is already here, and that's affordability or lack thereof. With the cost of housing in major urban centres having soared in recent years the market is forced to respond and adapt and hence we are seeing innovations arriving in our cities such as micro-living into the property market."
DG concludes by saying that whilst areas of the property market are set to possibly remain sluggish in the year ahead, there are some sound opportunities for property investment if buyers do their homework.
Author: Bronwyn Fourie (Weekend Argus - Personal Finance)