Commercial News

Buyer migration boosts Garden Route sales and prices despite economic slowdown

We are not just seeing a market that remains active, but we have seen an increase in buyers and sales over the last year. That is the word from Kaaiman Schutte, Seeff licensee for Mossel Bay and surrounds.

While the latest FNB Holiday Towns House Price Index points to a slowing in holiday home buying, Seeff’s licensees across the main Garden Route towns, from Mossel Bay and George to Knysna and Plettenberg Bay, note that they are not seeing a slow-down in activity insofar as residential buying is concerned.

While the leisure sector has slowed a little, the demand in the residential sector is more than making up for it according to Seeff’s branches in Mossel Bay, George, Knysna and Plettenberg Bay.

Schutte says that so far, Seeff has not observed any negative impact or fall out from the economic decline and interest rate hikes. Aside from an increase in residential demand, we are also seeing more investment buyers heading to the Mossel Bay area. Retirement properties are also seeing a strong interest as is agricultural land.

In addition to local residential buyers, we are seeing a constant stream of people moving into our area from other provinces, even from the Cape metro itself, says Schutte.

Prices in Mossel Bay is up by some 5%-7% over the last year. Total sales for the 2015-year stand at a very respectable 1,080 units worth about R1.3bn. The most popular price band is the R900 000 to R1.5 million range, but Schutte says that there is demand up to R1.9m.

Pieter Jordaan, Seeff licensee for George and Wilderness meanwhile note that they are seeing about 170 new families moving into the area each month and they are flocking here from across the country, especially the Gauteng and northern provinces, but even from Cape Town.

Jordaan says business is booming in the greater George area and with the international airport, the town has become a substantial commercial hub for the Garden Route.

Up to half of our buyers now come armed with cash and the rest have large cash deposits ready. Aside from residential property, vacant land and commercial property is also seeing strong interest.

Homes here are still cheaper than in the major metros and that often leaves buyers with some spare cash to invest in a business, something that is further fuelling growth here, says Jordaan.

Rental property too is now in high demand and short supply and the area has thus become quite a favourable buy-to-let market.

Prices in the George area has increased by a healthy 10% over the last two years, but buyers are still keen negotiators and seldom pay full price, he says. Properties below R1.5m are in short supply and sellers tend to get better prices on these.

In terms of the market, some 1,066 properties worth just over R1.2bn sold in the George area over the last year. The highest price paid for a residential property is R16m and R80m for a commercial property.

Sectional title prices though still range from an affordable R500,000 to R750,000 and freehold houses from R800,000 to R1.2m on average. There are though plenty of luxury homes in the area that can range to over R20m.

Suzi Bilyard, licensee for Seeff Knysna says that activity is still up year-on-year. Our market hit just over R1bn last year coming from some 575 unit sales, the highest since the pre-2007/8 period. Almost half of all sales were in estates and security complexes. The highest price paid was R16.6m for a home in Thesen Islands.

Activity for the first quarter of this year is also up from last year. Property prices have escalated year-on-year by 11% and as much as 26% over the last two years, from R1.61m in 2014 to R2.18m this year.

Bilyard says that despite the price growth, property prices in Knysna remain very affordable compared to the big metros. An exciting development in the area is a fibre optic network worth some R120m that is set to unlock further economic potential in the area, adding to the attraction of good private schools, low crime and a happier, healthier lifestyle.

Meanwhile, Plettenberg Bay licensee, Kevin Engelsman, also confirms that resident numbers are growing, driven largely by an influx of people looking to relocate or retire from up north. The wonderful climate, laid-back beach lifestyle, relative safety and clean surrounds are all contributing to the desirability.

These days, Plettenberg Bay is a bustling town with much more than just surf and sunbathing and plenty of adventure pursuits. You now have access to a top class lifestyle complimented by excellent amenities including restaurants, two shopping malls with big retail brands such as Woolworths, Edgars and more along with boutique brands such as Philosophy by Jenni Button, excellent schools and much more.

You are also only about an hour and a half’s drive from George.

The Plett property market generated about 347 unit sales to the value of R543.474m for the 2015 year. While the average sectional title price has remained fairly flat since 2014 at about R1m, the freehold price is now at around R2m, up from R1.8m in 2013.

A notable development has been the rise in top end luxury house prices paid, ranging upwards of R15m to over R40m. The area nonetheless remains very affordable with plenty of apartments below R1m and houses below R3m.

The Garden Rout is now seen as an attractive alternative for residential buyers heading here from across the country. The towns of the area are quite close together and the infrastructure is excellent. Add to that the sought-after seaside lifestyle and you can easily see why the area has become a new growth hub, concludes Bilyard.