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Convenience, safety and proximity, as well as excellent investment returns, are fuelling the middle-class urbanisation trend in SA’s big cities.
The global urbanisation trend, defined by young professionals and families relocating to smaller, more conveniently situated urban hubs, is gathering visible momentum in Johannesburg, Cape Town and Durban, as developers tap into a clear demand for central locations, low maintenance and state-of-the-art security.
In Johannesburg, the growing choice of contemporary apartment developments proliferating in and around Sandton, Rosebank and, more recently, Bryanston has yet to saturate the demand.
One- and two-bedroomed apartments priced at between R 1.5 million and R 2.5 million are selling out within days of their release, and in Rosebank particularly, where commercial redevelopment over the years has spawned a strong demand for residential property, investors are seeing excellent returns.
Renprop – a dominant developer in this sector, with three executive apartment developments including The Vantage, The Tyrwhitt and The Median, all in the heart of Rosebank – confirms that it is responding to a ‘strong, pent-up demand’ for accommodation in this city hub due to the upgrades to the Rosebank precinct.
“The market is mostly executives and corporates looking for upmarket accommodation, as well as investors looking for a good buy-to-let opportunity that offers solid rental potential and good capital growth,” says Chris Renecle, MD of Renprop.
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Apartments are priced at about R 1.75 million, with penthouses from R 7.5 million, and they are within walking distance of The Zone@Rosebank, Rosebank Mall, Gautrain station, and fitness, entertainment, restaurant and medical facilities.
“Renprop has sold 101 units in Rosebank over the 12-month period between August 2016 and July 2017, averaging 8.4 sales per month across these developments. The Vantage is fully sold out, and in that period there were 16 resales, with sellers achieving considerable value growth,” says Renecle.
Similarly, the ‘live, work, play’ lifestyle that these developments offer is the strongest drawcard for luxury Sandton apartment precincts like Sandton Skye, developed by CHN Eagle, and the 200 000 square metre residential estate planned for Sandton CBD, Kgoro Central, developed by Regiments Real Estate.
Units at Kgoro Central, being built over the next six years, are selling at an average of R 2.5 million, and according to Sydney Barlow, executive director for Regiments, there is a huge, untapped demand for safe city spaces where people can live, work and even raise young families without the need to drive anywhere.
“We exceeded 70% sales of units within the first quarter. Given its unbeatable location and truly cosmopolitan lifestyle offering in Africa’s richest square mile, the value growth on these units is expected to be exceptional, at about 25% per annum,” says Barlow.
Melrose Arch, Amdec Group’s trendy mixed-use precinct south of Sandton, last year launched its own apartment development, the contemporary 45 000 square metre One on Whiteley, which has proved hugely popular. “The first phases of One on Whiteley are already sold out, and the final phase has been released for sale. High levels of interest from investors and continued strong demand mean that, with the release of the final phase of apartments for sale, 75% of the total of 241 new residential apartments at One on Whiteley are now sold,” says Nicholas Stopforth, Amdec head of developments.
Apartment developments are also continuing to mushroom in Bryanston, the burgeoning urban hub adjoining Sandton to the north. Leogem’s Shearwater Estate, for example, has sold most of its 39 contemporary units (priced at between R 2.7 million and R 5.5 million) since launching toward the end of last year.
“We have 11 left. The attraction is lifestyle – the estate has a gym for the residents and excellent security, and of course it has an excellent location – it’s near Rivonia Junction and Riverside mall, and right opposite is Sandton pre-primary,” says Luyanda Tiba, agent for Leogem.
Even at the top end of this market, in the R 5 million to R 10 million bracket, there is a definite pull towards apartment living. The average price for a unit in The Houghton, geared to all types of homeowners but striking a particular chord with young professionals who enjoy proximity to key nodes, is R 8.5 million.
“It is also attracting families with children who previously commuted to the good schools in the area from outlying areas, but are finding the traffic congestion unfeasible,” says Arnold Forman, director of Seven and Twelve on Houghton (Pty) Ltd.
In Cape Town, meanwhile, new apartment developments are concentrated in the City Bowl, Green Point and Sea Point, with one of the most exciting residential developments in the pipeline being Harbour Arch mixed-use precinct, Amdec’s version of Melrose Arch to be located on the Foreshore.
“Cape Town’s expanding population and escalating traffic congestion between the city and suburbs during peak hours are driving the demand for living space close to the city,” says Chad Shapiro, senior commercial broker for Lew Geffen Sotheby’s International Realty.
Shapiro predicts that within a decade, the entire Main Road stretching from Sea Point to the city centre will have become an extension of the CBD, as well as a top-end commercial zone and popular residential zone in its own right, with semi-high-rise apartments and mixed-use complexes lining the thoroughfare.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says rampant sectional title development and sharp escalation of sale prices confirm Shapiro’s prediction. He says PropStats records show the average sale prices of apartments are R 3.6 million in Sea Point,
and R 3.47 million in Green Point, reflecting an annual growth of 15% and 21% respectively since 2010. At the top end, Cape Town apartments are now breaching the R 20 million mark.
Observatory is equally robust in this market, with apartment blocks like The Eden, by Horizon Capital, and Rawson’s The Paragon, Madison Place and The Winchester turning excellent sales. Within days of its release on the market, The Winchester sold 93% of its 105 units, selling at upwards of R 1.7 million. Only four units are left of the 141 units of The Paragon, and eight left of the 88 Madison Place units.
“The proximity of these developments to UCT, Groote Schuur Hospital and other city landmarks has offered investors and wealthy parents of students a good opportunity to capitalise on the market growth. A big factor is that, because they’re in an urban development zone, the buyer can claim 55% of the purchase price as a tax deduction over 11 years,” says Rawson sales agent Brad Morgan.
Morgan says security is another strong drawcard for these contained city blocks, many of which have biometric access control and 24-hour guards.
The rise of the Century City precinct over the last few years and the proposed development of Cape Town’s Foreshore are driving development northwest of the Cape Town CBD. Century City, a mixed-use development on a massive scale, catering for all types of apartment living needs, from a one-bedroomed pad in The Axis for R 2.5 million to a retirement scheme starting at R 3.75 million at the Oasis Luxury Retirement Resort, is testament to the growing new urbanisation lifestyle.
The full range of apartments available on the resale market varies from one-bedroomed apartments at around R 1.8 million to penthouse apartments of around R 12 million.
“We are currently in the planning stages for the redevelopment of Ratanga into an exciting mixed-use node, which will include further new residential developments offering the full spectrum from studio apartments through to penthouses, but this is unlikely to happen before the second half of 2018,” comments John Chapman, director of the Rabie Property Group. “Century City apartments have shown significant capital growth over the years. This varies from scheme to scheme and is in part a function of the timing of each development within the economic cycle of the country. Capital growth in the various schemes has varied from an average of 8% to 21% per annum,” adds Chapman.
In Durban, the Ridgeside precinct in uMhlanga will soon undergo a landscape transformation as it will include SNG’s latest upmarket residential development, The Skye Luxury Apartments. The first phase of this unique development will comprise luxury living, drive-up access apartments, and high-end retail and commercial spaces, while phase two will see the rise of a magnificent hotel and lifestyle centre. This development is designed to include a timeless blend of meticulous craftsmanship with modern and sophisticated finishes, where form meets function including exquisite sea, city and garden views.
Chief Executive Officer of the SN Group, Saantha Naidu, explains: “With the increasing demand of luxury living coupled with privacy and security, we are closing the gap between the accessibility of a freehold home and sectional title apartment living. What makes this one-, two-, three- and four-bedroomed development unique and sets it apart from majority of high-rise apartment buildings is the drive-up access that The Skye will offer. Residents will be able to drive to their lock-up garages that are positioned at their apartments, which eliminates the inconvenience and frustration of having to access your apartment by means of getting into an elevator.”
The Skye will be easily accessible from both the M4 and uMhlanga Rocks Drive and is in close proximity to popular schools, hospitals and uMhlanga’s world-renowned Gateway Theatre of Shopping complex.
The raising of the transfer duty threshold, from R 750 000 to R 900 000, earlier this year has also made it possible for more first-time buyers to purchase a flat closer to city hubs, and agents are expecting that in incentivising the investment market, good rental opportunities closer to big-city and urban hubs will become ever more available.
