How to Maximise returns in the Super Luxury market
The global super luxury property market has greater immunity to standard economic fluctuations than most residential property and South Africa is no different, but the one rule that applies whether you’re selling a studio in Illovo or a mansion in Clifton is that the property needs to be priced correctly for its market in order to sell.
That’s according to Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, who says sellers’ expectations in this market can be out of synch with valuations for the area and property type – often because they’ve invested so much of themselves in creating what is their perfect home.
“But what is perfect for one person isn’t necessarily perfect for everyone, and when one starts looking at the market above R50 million it’s a good idea to take guidance and advice from the experts before you put up the ‘For Sale’ sign.”
Geffen says while the market – especially in the Western Cape – is still strong in the luxury bracket, the length of time properties spend on the market has risen.
“There is appetite for luxury properties, especially in areas like the Atlantic Seaboard, Constantia and Bishopscourt, but it has slowed since the 2014 peak and property owners need to manage and adjust their expectations.
“Holding out for an unrealistic price could prove costly in the long run if the home spends an inordinate amount of time for sale, and it becomes stale. It’s therefore essential to appoint a real estate agency that not only has a proven track record in this market but also an extensive database with global reach.
“Cape Town’s super luxury market tends to attract more international buyers with the purchasing power of Pounds, Dollars or Euros and these buyers love the city because in property terms it offers far more bang for buck than most other comparable cities around the world.
Geffen says that realistic expectations and real estate agency selection are especially vital when the bulk of a seller’s capital is tied up in the property and debtors are insisting on settlement, one might need to try another sales strategy such as the auction platform for a faster way to the market and subsequent sale.
That said, whilst many people perceive auction to be a desperate measure or the depressing consequence of foreclosure, this is not always the case, especially in the luxury market where unique properties have a specific target market.
Joff van Reenen, Director and Lead Auctioneer for The High street Auction Company says residential auctions aren’t necessarily the way to go for every property.
“Residential property auctions are very specific for a very important reason as not every home is ‘auctionable’ but properties that are architecturally unique or of historic value tend to work exceedingly well on the auction platform.
“Auctions are perfect for those types of properties that could sit on the market for a long time while the owner looks for an ideal ‘fit’ in a prospective buyer. Niche residential auctions are effectively selling on steroids, because they are accelerated marketing campaigns marketed extensively to the correct buyer database and the people who end up participating are serious, pre-qualified bidders.”
Van Reenen says if processed correctly, auctions are an incredibly efficient way of selling real estate assets as it provides fast liquidity for owners.
“However, as with real estate agencies, you need an established auction company with an extensive database to reach the widest possible target audience.
“The professional status and experience of the auctioneer is also of paramount importance and he must be a member of the South African institute of Auctioneers as well as the EAAB, and hold a valid FFC.”
Van Reenen adds that auctions can also be relied upon to achieve realistic sale prices as they will always correct the market, especially in the super luxury bracket where seller expectations are often slightly high.
“This is due to the fact that auctions are a public event and when 200 to 300 people attend a 25-lot auction it always reveals true market value – and the market never lies!”
Van Reenen says a perfect example of the type of property that is extremely well suited to auction is a Clifton home that will go under the hammer on 24 November.
“This house ticks all the boxes; not only is it a unique home in the super luxury bracket, it’s also located in a prime location on South Africa’s most exclusive residential strip.
“The state-of-the-art house is situated on 1 627m² of prime real estate with never-ending views over the Atlantic Ocean and every luxury and convenience one could ever wish for.
“The property is effectively a family estate – four individual-access levels that include six garages, a gym, Jacuzzi, sauna, infinity swimming pool, wine cellar, internal elevator, study, indoor/outdoor entertainment areas, air-conditioning throughout and 24-hour security control with a guard house.”
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