Gauteng development hotspots for 2018, according to Seeff

In addition to ongoing development across Gauteng, large scale growth is especially predicted for the Northern and North Western suburbs of Johannesburg where platforms such as Airbnb are creating interesting trends in the Sandton property market in particular.

Dave Lewis, Seeff Sandton’s Developments Manager, says in the Sandton CBD and surrounds there is a great drive from both developers and the municipality to increase the number of residential homes.

“The council is very supportive of increased density in the area, especially along main roads, as the demand for housing close to the ever expanding commercial hub of the Sandton CBD is growing rapidly. While in the past there were maximum density restrictions, these days council is imposing minimum density restrictions.

Areas like Bryanston and Morningside are being developed at quite an alarming rate, as the sizes of the stands in the area are good for development and the existing services infrastructure is in place already. Here we are especially seeing a lot of townhouse and apartment developments going up.

Interestingly though we have also seen average price per square metre coming down in the last year as there is a lot of competition in the market.

The struggling market along with many options to choose from has put buyers in a very strong position and while R25 000 per square metre two years ago was seen as good value in Bryanston for an apartment, that is now very expensive and a competitive market related price is closer to the R22 000 per square metre at the moment.

In the more suburban parts of these areas, or local roads, the council is now supporting densities of 20 units per hectare whereas this time last year it was a maximum of 10 units per hectare.

Here we are seeing many full title cluster developments of four to eight units coming up and the prices being achieved are very high, often exceeding the R10 Million mark”.

Lewis continues that prices in the Sandton CBD itself seem to remaining relatively unchanged in the last few years.

“With quite a few very upmarket residential high rise apartment buildings in the CBD on the market and a good few more coming up, the prices have been forced to freeze.

Political instability has played a part here as most of these units are sold to investor buyers, who seem to rather be holding onto their money to see what happens with our political situation first”.

Lewis adds that platforms such as Airbnb are creating interesting trends in Sandton however.

“With the upturn in the short term rental market, investors are realising higher returns for their money with something like Airbnb than what they get with placing longer term rentals. This is one aspect that is keeping them interested and is aiding in sales still ticking over.

Developers are now designing projects to accommodate this type of investor and some bachelor units are being tailor made for the short term rental.

Illovo central which will begin construction next year has a unit type just 19m2 in size that was specifically designed with the Airbnb model in mind.

The building itself has all the amenities that you would expect from a high quality hotel, with a rooftop pool and bar area, 15 storeys high giving immaculate views. A gym, boardrooms and a spa all in the building and all available to the tenant, while the tenant is paying a significantly lower rate than what he would at a five star hotel in the area”.

Lewis concludes that should the political situation change for the better, he predicts a great upturn in the developments market.

Chris Hajec, Seeff’s MD in Randburg, says that this collection of​ well-known Johannesburg suburbs​ is a development epicentre at the moment for affordable, entry level homes as developers here target the first time home buyer and buy-to-let investors market alike.

“We have seen a boom in residential development in Randburg despite – and actually in reaction to – the dip in the market after the downgrade and 2018 does not seem likely to manifest a slowdown of any discernible level.

The model of higher density, affordable, mixed one, two and three bedroom unit developments which have been implemented by well-known developers like Reeflords and Renico has proven to be so successful and in demand, that the trend seems likely to increase in the year to come.

Developers seeking to stay active despite the downturn go for that segment of the market where they know demand has remained relatively high because of affordability and the broad range in consumers to whom these types of units appeal to”.

As two prime examples Hajec cites Randpark Ridge and North Riding as well-positioned and affordable locations to roll out three storey apartment and townhouse complexes which cater to the R600 000 – R1.3 million market.

“The imperatives in ensuring a successful development boil down to reasonable land costs, securing property which is appropriate for a higher density and pricing the properties affordably for your target market.

Savvy investors do not try to push the envelope in terms of price in this segment as consumers are extremely price sensitive and variations of just 5% can put a significant chill on desirability and impact the time spent on market which affects profit margins.

Developers are also looking for land that is already zoned or as far through the zoning process as possible and place a premium on land where they can “turn a shovel” after transfer, because it usually takes 24 months or more for agriculturally zoned land to be transformed into what the general public would deem a ​construction site.

Randpark Ridge and North Riding are the perfect examples of the recent trends in residential development in Randburg. Reeflords, a Chinese based developer has recently broken ground on a 312 unit development in Randpark Ridge situated at the corner of CR Swart and​ Beyers Naude.

The comprehensive marketing blitz mentioning extras like a clubhouse, fibre, pool, gym and security, in advance of the launch of Orchid Ridge​did not only appeal to the end users who would make the conveniently located development their home, but also to the investor by highlighting the above average investment return and competitive investment capital in Randpark Ridge”.

This highlights that buyers today are hyper sensitive about the finishes and extras and it can make or break a decision to go with one property or another.

Investors want a value proposition that meets set criteria. These are the details developers ignore at their peril,” concludes Hajec.

Gerhard van der Linde, Seeff’s MD in Pretoria East, says in 2018 many new smaller developments with 20 units or less priced at under R2 million are predicted for the East of Pretoria and in Centurion Seeff’s MD Steve van Wyk says that new developments and extensions of existing developments in suburbs such as Die Hoewes, Kosmosdal, Mnandi and Midstream is underway.