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Constantia Upper demonstrates market durability
Category Property News
Last year Constantia achieved the highest total sales value of all the Southern Suburbs in Cape Town, demonstrating the durability of this established and exclusive market that has at its top end the elite Constantia Upper.
Joanna Thomas, Select Area Specialist for Lew Geffen Sotheby's International Realty in Constantia Upper, says 2015 was an exceptional year in this luxury market.
“Last year 171 properties to the value of R1 396 341 720 changed hands in Constantia, with 71 sales and R753.72 million of the total value being in Constantia Upper, at a median price of R10.6m per property. This is the highest combined value of sales since 2010 when 84 properties changed hands for R695.87m, with an average transaction value of R8.28m.”
According to Lightstone data, the average year-on-year percentage increase in the value of property in Constantia Upper since 2010 equates to almost 8% per annum over five years, with a sharp spike over the past two years. The average selling price increased by 15.87% between 2013 and 2014, and by 17.1% between 2014 and 2015.
Thomas says: “In simple monetary terms, an investor who spent around R8.3m on a house in 2010 could have sold it last year for about R10.6m, which approximates to a 30% return on investment; healthy in anyone’s book.”
The average sale price in greater Constantia is more accessible and Propstats figures for the same period reveal that average house prices increased from R3.27m in 2010 to R6.43m in 2015.
“Although the whole of Constantia is indisputably one of the most scenic suburban areas in South Africa, Constantia Upper is in a class of its own and buyers are drawn by the larger plot sizes, the suburb’s elevated position closer to the mountains and its authentic country feel,” says Thomas.
According to Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, in addition to sales volume and rand value, two other key factors are also clear indications of this prestigious market’s strong recovery and growth in recent years.
“We have seen a significant decline in the length of time properties remain on the market. In 2013, less than half the properties sold within three months, with many remaining on the market for between one and three years.
“However, in 2015 only a handful of houses were on the market for as long as a year in Constantia Upper, with most selling in less than three months and some even in a matter of days.
“We have also noted a steady decline in the gap between asking prices and selling prices,” says Geffen, “from an average of 19% in 2010 and 15.1% in 2013 to 11.8% in 2014; shrinking even further in 2015 to just 9.8%.”
The two highest value sales in Constantia Upper in 2015 were in Southern Cross Drive (R51.5m) and Oak Avenue (R24m).
Arnold Maritz, Southern Suburbs Co-Principal for Lew Geffen Sothebys International Realty, says while there is a strong local market in Constantia, the ultra-luxury price band is most likely to appeal to foreign buyers.
“They come to South Africa with incredible buying power since the value of our local currency has declined so much. They are spending sterling, Euros and dollars, which makes luxury property affordable. This is evidenced by the fact that the most expensive properties sold in Constantia Upper last year went to European investors.
“Our company’s international affiliation and being able to market these properties on a globally recognised platform is invaluable in this price band, and numerous buyers have found their way to us through these channels.”
Thomas says a major driving force behind recent year-on-year property price increases in Constantia Upper has been the dearth of available stock coupled with growing demand.
“The vast majority of local home owners are reluctant to put their properties on the market at the moment for a combination of reasons. The current economic climate is a big factor, as is concern that they will not be able to find another property they want. This as buyer demand grows, especially for homes in the lower price band between R6m and R10m.
“In fact a whopping 54% of properties Constantia Upper have been owned by the same people continuously for 11 years or longer, and a further 15% have not transferred ownership for between eight and 10 years.”
There is a growing percentage of recent buyers with 23% of owners having bought less than five years ago, but Thomas believes that this figure would be considerably higher if supply matched demand.
“Many South African investors are buyers from Gauteng who want to move their families to an area with lower crime rates, better municipal services and good schools. Constantia Upper ticks all those boxes,” she says.
Although the large grounds of properties in Upper Constantia give one the illusion of wide open space, available land is a scarce and very sought-after commodity, with developers keeping an eagle eye on the market for properties with subdivision opportunities to become available.
Sillery is the latest in the slowly rising number of gated estates in the area, with 24 of the 26 available plots already snapped up.
“All plots are in the region of 1 350m², with prices ranging from R4.6m to R6.7m plus VAT for the plot alone”, says Thomas, adding that investors in these high-end estates are not just purchasing a home but also a luxurious and relaxed lifestyle that accompanies state-of-the-art security.
Thomas says that a growing number of buyers are families with young children looking to move into a catchment area of good schools in time to circumvent growing waiting lists.
“Constantia is not only home to excellent schools like Reddam House, Herzlia and Constantia Waldorf School, it’s also a short drive from schools like Bishops and Rondebosch Boys’ High School.”
“Constantia residents also enjoy the convenience of an established infrastructure, access to first class amenities and the myriad activities for outdoor and sports enthusiasts which are quite literally on their doorsteps.”
Author: Lew Geffen Sotheby's International Realty