Solid price growth, ROI for Waterfront, Water Club and Mouille Point apartments, Cape Town
With average sales prices escalating by about 39% on average over the last few years, apartments on the Atlantic Seaboard, especially those of the V&A Waterfront Marina, Water Club (Granger Bay) and Mouille Point rank amongst the best property investments in the country. Billy Rautenbach, Sales Manager for Seeff’s Atlantic Seaboard and City Bowl operations, says that a study of Lightstone data (sales, price growth and investment returns on resale) for 2000 to mid-2015, shows a booming apartment sector with strong capital growth, driven by high demand and keen investment. Overall, the price per unit sold escalated by 39%. At the V&A Waterfront Marina, Canal apartment prices rose by 20% year-on-year and Font Yacht Basin prices by 31%. Mouille Point and The Water Club apartment prices meanwhile rose by 16%. The study also shows that sellers achieved a return on their investments of about 17% to 19% on average over a 7-year holding period. This, says Rautenbach, against an average economic growth rate of about 3% - 4% at best and national average price growth of about 8%-12% in nominal terms. The excellent growth is a clear signal that buyers and investors view apartments in these areas as a sound investment vehicle. If we have learnt one thing in the aftermath of the 2007/8 economic downturn, the worst global turndown in history, it is that the Atlantic Seaboard and apartments specifically, are a sound investment, adds Rautenbach. Even now, despite the dip in activity over the last few months, the apartment sector continues to perform well. Sellers are getting good prices with about 80% of recent sales concluded within 5% of the asking prices. John Loos, FNB Home Loans household and property sector strategist, also pointed to the sectional title sector of the overall housing market as showing the best performance in terms of general price growth. The Atlantic Seaboard is now in a league of its own in terms of the prices that buyers and investors are prepared to pay and, adds Rautenbach, for sellers, this means excellent returns. The apartment sector accounts for about half of the R7.3bn in total sales recorded on Propstats for the Atlantic Seaboard since the start of last year, generating a significant almost R3.65bn in value. Activity at the Waterfront Marina, Water Club and Mouille Point peaked in 2014 with 1184 sales worth R3.660 billion, notably more than the previous peak of 2007 when 1365 units sold to the value of R2.950 billion. This equates to a 24% rise in total rand values while unit prices escalated by 39% from R2.175m in 2007 to R3.027m in 2014. The first two quarters of 2015 were even better, both recording the highest sales in over five years of 277 worth R1.348bn and 237 sales worth R840m for the first and second quarters respectively. The ultra-luxury market of the V&A Marina showed outstanding performance with 219 units sold to the value of R661m in 2014 compared to the previous peak of 2007 when 395 units sold to the value of R945.6m. Finella Botes, Seeff’s area specialist for the V&A Waterfront, Water Club and Mouille Point says that if buyers and investors find what they are looking for, they are still putting in excellent offers. The agent for example recently sold two units at the Waterfront, both in Kylemore, for the full asking prices of R11.995m and R12.995m, the latter achieving a rate of R94.167/sqm, the highest for a canal-side apartment this year. Both were cash transactions to local buyers. In Mouille Point too, the agent sold a two-bedroomed unit in South Seas for R8.33m, just under the asking price, also achieving a significant rate of R65.591/sqm. Prices at the V&A Marina have escalated notably since 2000, says Rautenbach. In 2007, the average was R7.88m. By 2014, it had risen to R9.592m. Canal apartment prices rose by 303% in the 2000 - 2015 period and Front Yacht Basin apartments by a massive 469%. This equated to annual growth of 20% for the Canals and 31% for the Front Yacht Basin. In 2000, the Canal apartments sold for R13.900/sqm on average. By the 2007 boom year, it stood at R44.386/sqm and by mid-2015, at R56.036/sqm, thus a four-fold rise. The average for the Front Yacht Basin was R13.724/sqm in 2000. By mid-2015, it had risen by more than five times to R78.136/sqm and was now selling for about 40% more on average compared to those on the Canals. Sellers achieved returns of 17% - 19% on average over a 7-year holding period. On the Canals, Kylemore sellers achieved 29%, in Juiliette, 26% and in both Gulmarn and Carradale, 24%. On the Front Yacht Basin, Pembroke sellers achieved a nominal 30% per annum, 24% in Palgrave and 22% in Parama. The Water Club development in neighbouring Granger Bay overlooks a yacht-lined bay and, the world-renowned 5-star Radisson Blu Hotel is situated here as is the Granger Bay Hotel School. This makes it absolute prime property, says Botes. Although there are six apartment blocks (Antigua, Biscay, Calais, Elstree, Dover and The Water Club Court), stock is almost impossible to find, such is the demand, she adds. During 2014/15 a total of 15 units worth R86.67m were sold at the Water Club. The most popular price band, the R5m to R10m range yielded an average sales price of R55.815/sqm, about 36% more than the 2007 average of just over R40.000/sqm. The highest prices achieved were R10.15m for a 147sqm unit in Calais and R10.83m for a 128sqm unit in Biscay, both sold at an average of R76.829/sqm. Mouille Point, regarded as the platinum mile, is home to 34 apartment blocks including new and modernised complexes and offers something to fit every lifestyle. Aside from a premier seaside location, many of the apartments enjoy fabulous sea and mountain views. In 2010, the average sales price for Mouille Point was R3.333m. By 2015, it had escalated to R5.98m, equating to a year-on-year rise of 16%. The 2.5m - R5.0m price band achieved an average sales price of R35.245/sqm during 2015 and the next price band of R5.0m – R10.0m, an average of R47.634/sqm. The luxury sector fared even better, achieving an average rate of R57.340/sqm on sales in the R10m - R20m price band. The latest addition, the new Amalfi apartment block raised the average sales price significantly to R136.364 - R168.076/sqm although the agent cautions that this is not yet the norm in the suburb. Given the limited land space and rising demand for apartments in these areas, property values are likely to continue trending upwards, says the agent. Activity over the short-term, at least for the remainder of this year, is set to remain excellent and those still looking to sell should be able to find a good price. Contact Seeff V&A Waterfront office on 021 425 5970 or visit www.seeff.com. Statistics are based on Lightstone data and all ROI’s are quoted in nominal basis
