The last six months, says Craig Gilfillan, Rawson Properties’ franchisee for Observatory (and, more recently, Pinelands), has seen a huge pick-up in demand for homes in Observatory and this, he says, has caused a serious stock shortage. However it has not as yet affected prices, which, in his view, remain eminently reasonable.
“Demand throughout the entire precinct,” says Gilfillan, “is driven by the steadily growing student population, most of whom need to be close to their campuses. It is sometimes not appreciated that in our area, or close to it, we have, in addition to the UCT campus; the UCT Medical School, the Cape Peninsula University of Technology, the Cape Technikon, the Ruth Prowse School of Art, the AFDA Film School, Damelin and other tertiary education centres. We therefore have to find accommodation each year for thousands of students.”
The good news from an investor’s point of view, says Gilfillan, is that these students are able to – and do – pay R2,000 to R3,000 per room per month and his own rental operation, which manages over 60 properties, currently has only three or four late-payers and no non-payers.
“Investors,” says Gilfillan, “are increasingly aware that this is an extremely good rental market, offering net returns from day one of 8% or more in many cases.”
Typically, he adds, the fastest selling Observatory homes and those giving the best rental returns are in the R800,000 to R1,4 million bracket. These are almost all free-hold homes which can take anything from four to ten occupants. The number of apartments in the area is extremely limited.
Homes priced at R1,6 million or above, although charming and almost invariably very well-maintained, will, says Gilfillan, usually take a long time to sell, if only because similar (and similarly priced) homes can be found in Rosebank, Rondebosch and Pinelands, which many people tend to see as ‘better areas’, although they lack Observatory’s ambience.
Apart from investors, however, among his potential buyers, says Gilfillan, are many upwardly mobile ‘with-it’ management and professional types, frequently with young families. Such buyers, he says, are, like the students, attracted to Observatory because it has a flourishing culture all of its own.
“This is one of the few areas in Cape Town – like Upper Kloof Street and De Waterkant and there might be others – which is genuinely cosmopolitan with a lively night life, flourishing bistros and restaurants and a genuine community spirit. Also, of course, Observatory has the great advantage of being conveniently sited in relation to the CBD – even in peak traffic hours this can be reached in 20 minutes.”
The more discerning buyers, says Gilfillan, appreciate the architecture and ambience of the area. At least 80% of Observatory’s homes, he says, date from the Victorian era and have cast-iron fireplaces, sash windows, Oregon pine floors and extensive verandahs (often with wrought-iron decoration) that make these homes so appealing to many.
The prices of homes in Observatory, says Gilfillan, have definitely bottomed out and are likely to start rising by early next year. Now, he believes, is the right time to be buying here and this confidence is boosted by the fact that attendances at show houses, if and when with limited stock, he is able to put these on view, are more than double what they were last year.
“This is a sure sign that the market is on the up and up and improving – which we always predicted would be the case.”
