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Now is the time to invest in these Atlantic Seaboard suburbs
Category Property News
The upmarket Cape Town Atlantic Seaboard suburbs of Fresnaye and Bantry Bay took a perceptible knock this year with a significant dip in sales volumes compared to recent years - but there has been an encouraging upsurge in market activity since the end of the third quarter.
This is according to Lara Kaplan and Fran Segal, Area Specialists for Lew Geffen Sotheby’s International Realty, who say they have seen a marked uptick in enquiries during the last two months, especially in the entry- to mid-level sectors.
“We have noticed around 20% more activity since August, with interest from both local and foreign buyers. This can largely be attributed to the easing of drought conditions, which kept many investors at bay for at least a year, as well as price correction as sellers have started to adjust their pricing expectation to current market conditions.”
Citing Propstats data, CEO Brendan Miller says this renewed activity is a very welcoming shift after Fresnaye and Bantry Bay saw a 22.7% and 27.2% year-on-year drop in sales volumes, respectively, during the first two quarters of 2018.
“Between January and June last year, a total of 22 transactions in Fresnaye realised a combined value of R347.22 million at an average sale price of R15.78 million compared to 2018 when 17 transactions with a total value R228.75 million and an average selling price of R13.45 million were concluded,” say the agents.
“During the same period last year, there were also 22 sales negotiated in Bantry Bay with combined value of R211.83 million and between January and end-June this year, 16 transactions realised a total of R228.37 million. The average selling price, however, rose from R9.6 million to R14.27 million, but this was due to two big-ticket sales.”
According to Kaplan and Segal, there are also considerably more properties on the market this year, with many sellers reinvesting offshore rather than buying new homes locally.
“Unfortunately, many homeowners, especially at the upper end, are becoming increasingly nervous about the country’s economic stability, the ongoing political turmoil and the land expropriation issue which have all seriously eroded investor confidence,” say the agents.
“However, there is still considerable demand for entry- and mid-level properties if realistically priced and, with area being in a price correction cycle, it’s definitely an excellent time for investors to realise far better value along this prestigious strip than was possible in recent years.”
They add that whilst owners are by no means ‘giving’ their properties away, the shift to a buyer’s market has seen sale prices drop by between 10% and 15% in most sectors this year, with the best deals predominantly found in the housing sector.
“The sectional title market has generally held up considerably better than the housing sector on the Atlantic Seaboard, but not all suburbs have fared equally well,” says Miller.
“The average apartment price in Bantry Bay in 2017 was R8.2 million, and by the end of October this year, had risen to a respectable R10.93 million, excluding two exceptionally high-end sales of R80 million and R53 million each. In Fresnaye, the average sale price of an apartment only nudged up fractionally, from R7.49 million last year to R7.86 million during the first ten months of 2018.”
Miller says in the housing sector, the average selling price in both suburbs dipped this year, from R17.69 million and R16.62 million, respectively, to R13.35 million and R15.94 million, with the latter figure excluding a R55 million sale.
However, compared to the market performance of many other upmarket Cape Town suburbs, these enclaves have weathered the storm remarkably well considering the phenomenal growth experienced during the last decade, as well as their price points.
Kaplan and Segal point out the fact that 51% of all current homeowners in Fresnaye and 48% in Bantry Bay have owned their properties for eleven years or longer, demonstrating the perceived investment value of these suburbs.
“It’s also interesting to note that Lightstone data further reveals that the vast majority of buyers during the last twelve months fell under the demographic of investors who generally have school-going children and regard property as a long-term investment,” say the agents.
“In Fresnaye, 32% of the investors were 35 years or younger, while 40% were aged 36 to 49, and in Bantry Bay the under 35s accounted for 35% of all buyers, with 26% being middle-aged.”
“Despite market conditions, Fresnaye and Bantry Bay remain two of the most sought-after residential suburbs in the country for a number of compelling reasons, not least their unique positioning,” says Miller.
“Both suburbs offer unsurpassed views from most properties whilst being secluded and relatively wind-free. Yet, despite their idyllic positioning and tranquil oceanfront lifestyle, they are also in convenient proximity to an array of top-class amenities, good schools and the CBD.”
Author: Lew Geffen Sotheby's International Realty