The sophisticated apartment blocks on or near Beach Road, Strand (most of which look directly onto the beach and False Bay and which are often new and high rise) currently offer buyers what many think are the greatest bargains to be found in the entire Greater Cape Town area, says Wouter Joubert of the Rawson Properties Strand franchisee.
Joubert said that under normal market conditions there is a 7 to 10% sales turnaround in the 1 700 Beach Road properties, but in the last two years, he said, this has dropped to only 2 to 3% of the total.
'Buyers are now few and far between with the result that we have a massive oversupply situation'
This huge stock, said Joubert, coupled to the very noticeable conservatism of todays buyers has caused the majority of Beach Roads prices to be drop by anything up to 40% or 50% - the highest drop in the area that the Rawson franchise serving this district has ever witnessed.
'I can,' he said, 'show you large, chic, modern units which came on the market at R30,000 per m2 and which are now selling at R16,000 per m2. Even less prestigious, older blocks have witnessed drops in prices from R12,000 per m2 to R8,500 per m2'
The situation, he said, had been exacerbated by speculative investors who had confidently expected to be able to resell within 12 to 30 months at a 10% to 20% profit, as was done in the boom era of 2003 to 2007.
'Sadly, many are now losing out very heavily,' he said, 'proving once again that there is always great risk involved in being a short term speculator'
For four years now, said Joubert, there has been virtually no new development in the Beach Road area and it is therefore probable that within two or three years the current stock will have been taken up and prices will begin to rise spectacularly again.
'If this is the future scenario, as I suspect strongly it will be, the day will come when those who moved in now will look back and be grateful that they bought at these all time lows. They will be particularly fortunate if they were able to fix the rental rates at current levels for two to three years, as, again, is now being done'
In the boom periods, said Joubert, 15% to 20% of the purchasers had been investors. Right now, they comprise less than 5% of the total.
'The reason is so much a lack of demand as an inability to raise the 95% or 100% bonds that many investors look for: the banks are sticking to demands for high deposits, especially when the purchase is not the buyers primary residence'
Asked if the shortage of buyers has boosted rents, Joubert said that long-term rentals on Beach Road are 'nothing to write home about', but short-term holiday rents are still very satisfactory.
'Over the December/January period a luxury three bedroom in a high rise block can command a rent of anything from R1 200 to R1 800 per day,' he said.
For further information contact Wouter Joubert on 082 871 0512 or email wouter.joubert@rawson.co.za.
