Illovo market bolstered by growing demand for homes near key commercial nodes

Illovo market bolstered by growing demand for homes near key commercial nodes

Category Property News

Slowing economic growth and socio-economic uncertainty are taking their toll on the increasingly subdued Gauteng residential market, but some areas are proving more resilient, especially suburbs like Illovo that tick all the boxes for investors seeking property near Sandton, South Africa’s financial powerhouse. 

This is according to Justine Roux, Area Specialist for Lew Geffen Sotheby’s International Realty, who says: “While we have noticed a downturn in the market this year, there is still appreciable activity and investor interest, particularly in the sectional title sector that accounts for 82% of Illovo’s property landscape. 

“During the 12-month period ending 30 September, 76 sectional title properties changed hands at an average sale price of R1.92 million with property values showing growth during the last three months when 26 of the total sales achieved an average price of just a few rand short of R2m.”

Roux adds: “Illovo is especially attractive to young professionals as it offers a broad selection of sectional title homes within a vibrant community where residents enjoy the convenience of having myriad amenities literally on their doorsteps and an easy commute to work. 

“Abutting several of Johannesburg’s most exclusive suburbs, Illovo is not only a stone’s throw from Sandton, it also has its own prominent business precinct with an established infrastructure and high-quality tenant profile, including a number of top financial service companies.”

At the entry level are one and two- bedroom flats at around R1.3m and R1.6m respectively, with a variety of mid-market options priced between R2m and R3.5m. At the upper end of the market, a budget of R6m to R7.5m will buy lavish lock-up-and-go convenience with all the bells and whistles.

However, Roux says that the upper limit of the Illovo sectional title market has extended considerably in recent years to include an exclusive super-luxury segment.

“Several of the new developments boast sumptuous designer homes in the R10m plus price band with a few properties even nudging trophy home status.

Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty says: “Freehold properties may account for only 12% of the homes in Illovo but this niche sector is equally diverse, with house prices ranging from a modest R5m through to R25m.

“However, with the majority of houses falling in the R8m to R15m price band, this market segment has felt the pinch of the downturn far more than its sectional title counterpart with few sales and a drop in price during the third quarter.

“Only five houses were sold between October 2015 and September this year, achieving an average sale price of R8.93m. However, two of these transactions occurred during the last three months, selling at an average sale price of R8.87m.”

Geffen adds that an analysis of Lightstone data clearly illustrates Illovo’s changing market and shifting buyer and resident demographic. 

“While the majority of residents have owned their homes for 11 years or longer, 24% of population bought within the past five years and, most significant, is that 49% of all investors who bought property in Illovo during the past year were under the age of 35.”

According to Shaun Groves, Gauteng Rental Manager for Lew Geffen Sotheby’s International Realty, Illovo has a more complex rental market than most areas with monthly rentals starting at a very accessible R8 000 while the top end extends to R70 000.

“Like most areas in Johannesburg, there is a healthy supply of rental property but Illovo is one of the few suburbs where demand is keeping pace and realistically-priced homes, especially in the lower and middle sectors, will usually spend very little time on the market. 

“However, owners of older properties must be prepared to invest in renovation as they will struggle to let homes that haven’t been updated since before the millennium.” 

Groves adds that the buy-to-rent market, especially at the lower end, has also remained fairly active, offering decent short term returns of up to seven percent but it must be remembered that it’s a medium to long-term investment and more substantial returns will only be realised after a few years.

Roux believes that the market is likely to maintain its momentum as very few suburbs can match Illovo’s appealing cornucopia of drawcards.

“Residents enjoy the luxury of living, working and playing within one area, which is extremely desirable in a city known for its traffic congestion and long daily commutes.

“Fricker Road is Illovo’s main business hub and place of work for many of the suburb’s professional residents, while Illovo Boulevard is a thriving tree-lined mixed use area where commercial concerns are interspersed with trendy cafes with packed outdoor seating areas.”

Illovo is also in close proximity to several of the country’s finest schools, including St David’s Marist Brothers, Kingsmead College and St Theresa’s Mercy School. The University of Pretoria’s Gordon Institute of Business Science is also situated within the suburb. 

Author: Lew geffen Sotheby's International Realty