John Birkett, one of the Rawson Property Group’s longest serving agents and almost always a top performer in the Southern Suburbs sectional title sector (for which, in partnership with Steve de Villiers, he has recently formed a specialist sales team operating from the Rawson Property Group’s Claremont franchise which he now owns), said this week that the increasing popularity (and rising prices) of sectional title units in the Mowbray to Kenilworth ‘academic belt’ stem from this market’s ability to cater for a number of different types of buyer.
These he listed as:
- Students, whose parents quite frequently buy the property for them rather than pay rent, thereby on reselling very often make sufficient profit to cover the student’s entire tuition fees;
- Property investors, who increasingly appreciate that this type of market can give good returns from very early on, in some cases actually covering their monthly bond repayments;
- First time home buyers who hone in on this market as they like the areas and the prices of sectional title units are lower than those of freehold units;
- Holiday home buyers;
- Retirees looking to scale down from larger, less secure homes; and
- Families, mostly young and often with children, who accept that for a time at least sectional title living is necessary to get them onto the home owning ladder.
Typically, said Birkett, the Southern Suburb’s sectional title stock will include bachelor flats, one, two and three bedroom apartments (with the occasional four bedroom apartment), simplex and duplex townhouses and a few penthouse suites.
In the area served by his specialist team, said Birkett, bottom rung studio/bachelor and one bedroom apartments will usually be priced from R600,000 to R1,6 million and two bedroom apartments from R1,2 million to R2,5 million. Three bedroom units will probably be priced from R1,5 million to R3 million and townhouses from R2 million to R7 million. Penthouse suites with up to 400 m2 of floor space, and possibly linked to a rooftop garden or swimming pool, can achieve prices of anything from R2,5 million to R8 million.
Birkett said that in his area, the number of sectional title sales made in the last 12 months (590) actually exceeded the number of freehold sales (530). These figures exclude the numerous new developments that have mushroomed in the central Southern Suburbs area. Nevertheless, he said, there are seven times as many estate agents serving the freehold sector as the sectional title sector and this is probably because estate agencies appreciate that this sector requires specialist knowledge and training.
“The turnaround times in sectional title sales are usually shorter than those in freehold property and estate agents have to be totally familiar with the laws governing this sector and the rules that their bodies’ corporate and home owners associations set, especially as regards the payment of levies and the maintenance of units.”
From an investor’s viewpoint, said Birkett, the success of the Southern Suburbs sectional title sector is shown by the fast rise in rentals that has been achieved recently. He said that bachelor flats will now very seldom rent for less than R5,000 per month and rentals in the larger units and townhouses can often be as high as R20,000 per month. The average rental of two bedroom units in the more sought after areas of the Southern Suburbs today is around R12,000 per month. Rental prices are ’driven’ up by the almost insatiable demand of the academic community.
Price rises in this sector have also been ‘spectacular’ for several years now, said Birkett. On one sectional title unit which he sold for a quick in-and-out investor, a 27% price increase was achieved in one year – and on another the price increase was a startling 46% year-on-year.
“It will therefore come as no surprise,” said Birkett, “that the number of investors in the sectional title sector actually more than doubled in the last 18 months. The good news, however, is that as yet I can see no reason why these very satisfactory price increases should not continue for the foreseeable future.”
