Atlantic Seaboard apartments shine with price growth, ROI

(Seeff)
(Seeff)

Cape Town - With average sale prices escalating by about 39% over the last few years, apartments on the Atlantic Seaboard, especially those of the V&A Waterfront Marina, Water Club (Granger Bay) and Mouille Point rank among the best property investments in the country, according to Billy Rautenbach, sales manager for Seeff’s Atlantic Seaboard and City Bowl operations.

He says a study of Lightstone data on sales, price growth and investment returns on resale for 2000 to mid-2015 shows a booming apartment sector with strong capital growth, driven by high demand and keen investment.

Overall, the price per unit sold escalated by 39%. At the V&A Waterfront Marina, Canal apartment prices rose by 20% year-on-year and Font Yacht Basin prices by 31%. Mouille Point and The Water Club apartment prices meanwhile rose by 16%.

The study also shows that sellers achieved a return on their investments of about 17% to 19% on average over a 7-year holding period.

This, says Rautenbach, against an average economic growth rate of about 3% to 4% at best and national average price growth of about 8% to 12% in nominal terms. Despite the dip in activity over the last few months, sellers are getting about 80% of recent sales concluded within 5% of the asking prices.

The Atlantic Seaboard is now in a league of its own in terms of the prices that buyers and investors are prepared to pay, says Rautenbach.

The apartment sector accounts for about half of the R7.3bn in total sales recorded on Propstats for the Atlantic Seaboard since the start of last year, generating a significant almost R3.65bn in value.

Activity at the Waterfront Marina, Water Club and Mouille Point peaked in 2014 with 1 184 sales worth R3.66bn, notably more than the previous peak of 2007 when 1 365 units sold to the value of R2.95bn.

The ultra-luxury market of the V&A Marina had 219 units sold to the value of R661m in 2014 compared to the previous peak of 2007 when 395 units sold to the value of R945.6m.

Finella Botes, Seeff’s area specialist for the V&A Waterfront, Water Club and Mouille Point says if buyers and investors find what they are looking for, they are still putting in excellent offers.

She recently sold two units at the Waterfront, both in Kylemore, for the full asking prices of R11.995m and R12.995m, the latter achieving a rate of R94.167/m², the highest for a canal-side apartment this year. Both were cash transactions to local buyers.

In Mouille Point too, the agent sold a two-bedroomed unit in South Seas for R8.33m, just under the asking price, also achieving a significant rate of R65.591/m².

Prices at the V&A Marina have escalated notably since 2000, says Rautenbach. In 2007, the average was R7.88m. By 2014, it had risen to R9.592m. Canal apartment prices rose by 303% in the 2000 to 2015 period and Front Yacht Basin apartments by a massive 469%. This equated to annual growth of 20% for the Canals and 31% for the Front Yacht Basin.

In 2000, the Canal apartments sold for R13.900/m² on average. By the 2007 boom year, it stood at R44.386/m² and by mid-2015, at R56.036/m².

The average for the Front Yacht Basin was R13.724/m² in 2000. By mid-2015, it had risen by more than five times to R78.136/m² and was now selling for about 40% more on average compared to those on the Canals.

Sellers achieved returns of 17% to 19% on average over a 7-year holding period. On the Canals, Kylemore sellers achieved 29%, in Juiliette, 26% and in both Gulmarn and Carradale, 24%. On the Front Yacht Basin, Pembroke sellers achieved a nominal 30% per annum, 24% in Palgrave and 22% in Parama.

The Water Club development in neighbouring Granger Bay is prime property, says Botes.

Although there are six apartment blocks (Antigua, Biscay, Calais, Elstree, Dover and The Water Club Court), stock is almost impossible to find, such is the demand, she adds.

During 2014/15 a total of 15 units worth R86.67m were sold at the Water Club. The most popular price band, the R5m to R10m range yielded an average sales price of R55.815/m², about 36% more than the 2007 average of just over R40.000/m².

The highest prices achieved were R10.15m for a 147m² unit in Calais and R10.83m for a 128m² unit in Biscay, both sold at an average of R76.829/m².

Mouille Point, regarded as the platinum mile, is home to 34 apartment blocks including new and modernised complexes and offers something to fit every lifestyle. Aside from a premier seaside location, many of the apartments enjoy fabulous sea and mountain views.

In 2010, the average sales price for Mouille Point was R3.333m. By 2015, it had escalated to R5.98m, equating to a year-on-year rise of 16%.
The 2.5m to R5.0m price band achieved an average sales price of R35.245/m² during 2015 and the next price band of R5.0m to R10.0m, an average of R47.634/m².

The luxury sector fared even better, achieving an average rate of R57.340/m² on sales in the R10m to R20m price band.

The latest addition, the new Amalfi apartment block raised the average sales price significantly to R136.364 to R168.076/sqm although the agent cautions that this is not yet the norm in the suburb.

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