What to expect from the property market in 2018

 

South Africa’s sometimes volatile currency and economy can be daunting for some investors, but economic uncertainty does not necessarily affect all sectors. Despite confidence in the economy remaining somewhat skeptical, many new construction projects were announced during 2017 and significant investment has been made into the property industry – with more expected in 2018.

“Properties in Amdec new urban precincts continue to sell, and demand is higher than ever,” according to Managing Director of ‎Amdec Property Developments Nicholas Stopforth.

While spikes in investment in property do directly relate to confidence in the economy, as with any other investment, there are some developments that will vastly outperform others.

In Cape Town, for example, demand for property remains high despite the current water crisis. The Mother City continues to be an attractive market for international investors, for obvious aesthetic reasons, as well as locals who are still “optimistic” about the state of the country.

“We are seeing a lot of interest in properties on the foreshore and Atlantic Seaboard areas,” says Stopforth. “There are significant opportunities for capital growth in the city. The Yacht Club development at the Roggebaai Canal precinct at the entrance to Cape Town’s waterfrong, for example, launched in January 2016 at R48 000 per square metre and the last unit was sold at the end of 2016 for R75 000 per square metre.

He believes if investors in the development were to sell now they could achieve a price higher than the R75000m2

Another example is their latest development, Harbour Arch on Cape Town’s foreshore – with the first phase due for completion by end 2020.  It will be the largest of its kind in the city at 5.8 hectares.  The investor packages started at R48 000 and now sell for up to R70 000 per square metre. Of 432 residential units available, less than 90 remain.

Another trend he foresees for 2018 is more youth moving into city centres, noting that “traffic is a time waster in our modern life”.

“People, and in particular young people, don’t want to sit in traffic for hours every day. There is a strong demand for properties in the CBD from young professionals trying to simplify their lives,” he explains.

With space in city centres being a limited resource, the only way to cater to the demand is to create new urban precincts.  Stopforth believes mixed-use precincts will be the biggest property trend in 2018.

But mixed-use schemes need feet, they need people supporting the restaurants, retail outlets and hotels, and having meetings in cafes and bars. To meet their clear demand for inner-city properties, it is essential that developers create products that are affordable to young professionals.

And the best way to get a good price in such a development? Stopforth advises investing off-plan.

“Get in at the beginning, when developers are looking to get a project off the ground with initial sales – before the risk is gone and the prices go up.”.

Amdec Property Group is known for developing new urbanism-style precincts such as their flagship development Melrose Arch in Johannesburg, and the newly-announced Harbour Arch which is in the first phase of development in Cape Town.

“We have many international buyers in our developments, especially in Cape Town as a unique market with so many great property opportunities.

Additionally, trend-wise developers are under pressure to incorporate water-wise features in new developments. He advises those wishing to sell freehold properties should do the same.

“The water crisis in Cape Town is the major talking point of the moment, but it isn’t putting people off purchasing property in the city. People are, however, asking what developers are doing about it,” says Stopforth. “As responsible developers, we put water saving designs such as grey water recycling, rain water harvesting and where possible, desalination of the ground water we are obliged to pump.“

The core aspect of such developments is that everything you need is accessible by foot – with hospitality, commercial, and residential space combined to create an urban haven.

Stopforth explains that safety and security, combined with a “real sense of community”, creates an appealing lifestyle which is safe and secure.