Investment Hot spots and new development locations – PART ONE Johannesburg
BY NEALE PETERSEN
Despite tough economic times and headwinds in the property industry South Africa’s new property development construction pipeline is still growing at a rapid pace. This confidence is reflected in current Stats SA reports which recorded building plans passed by larger municipalities at current prices per province for the period January -July 2018.The province which approved the largest amount of building plans per total square meterage for this period was the Western Cape with a total of 1,413,402 m2 in approved plans. Gauteng followed at 1,111,604 m2 in approved plans, and KwaZulu-Natal placed a distant third at just 291,014 m2.
Gauteng outperformed the Western Cape in terms of plans for freestanding properties, while the Western Cape outperformed Gauteng in terms of plans approved for townhouses and flats. Deon van Zyl, head of the Western Cape Development Forum says that Western Cape could have been much more. He says over R60bn in commercial and residential proposals are ‘stuck’ in the municipalities ‘red tape’ system pending approval. More and more Capetonians are choosing to renovate their sectional titles closer to the CBD rather than relocate to freestanding homes where they would be forced to endure the commuting problem. The prominence of cranes in these cities demonstrate as a positive sign of development activity.
These new property developments are significant indicators from developers that our local property market is bullish. Despite investors being highly challenged at all times and it is perceived that buyers will always invest in well-priced properties.
Approved building plans per province – Jan – July 2018
Consumer confidence holds the key to any possible turnaround in the residential market in 2019 says Herschel Jawitz, CEO of Jawitz Properties. While consumer confidence remains in positive territory, it has not yet translated into an increase in the demand for property by buyers. The 2019 residential market will continue to offer buyers the best value in terms of property prices and buying opportunities since the 2008/9 market crash.
Africans investing in Africa
While the number of international buyers in residential property in South Africa remains relatively low, at somewhere in the region of three percent nationally, investors from elsewhere on the continent – including returning expats – retain their appetite for the acquisition of South African real estate for a variety of reasons according to Andrew Golding, CEO of Pam Golding Properties.
These include countries such as Zimbabwe, Zambia, Namibia, Nigeria, Botswana, Kenya, Angola, Mozambique, Angola, DRC, Ghana and Gabon, among others. The price range mostly in demand is from around R800 000 to approximately R5 million, with some enquiries and transactions up to R10 million and beyond.
Many are business executives, including entrepreneurs, either travelling regularly to South Africa on business or establishing bases from which to expand their operations, not only in South Africa but also in other African countries. As they may spend considerable time in the country it makes economic sense to purchase a property here, an evident growing trend.
The 2019 residential market will continue to offer buyers the best value in terms of property prices and buying opportunities since the 2008/9 market crash. For those buying, we continue to see investors, first-time buyers and those downscaling to smaller properties making acquisitions in the price ranges from R600 000 to the R2 million mark, with savvy buyers snapping up good deals and enjoying the wide choice available. In the current market, investor decision is driven by affordability and rental return.
Due to the migration to cities we expect to see the lower end of the market continuing to flourish, in turn creating a new generation of property owner. Some start off by buying entry level properties which they then sell after two to three years and upgrade to a higher price bracket, which bodes well for this market.
REIM gives an overview of the some of the main metropolitan areas where residential development activity is taking place and a look at some the of hot spots and developments on offer in Johannesburg, Pretoria, Cape Town, Kwazulu-Natal and Port Elizabeth plus other areas. This month we start with Johannesburg, Gauteng with some of the key developments and hot spots making waves for investors.
JOHANNESBURG AREA OVERVIEW
In Gauteng areas such as Sandton, Fourways, Sandhurst, Hyde Park and Houghton are generally high demand areas in the upper end of the market. Bryanston, Rivonia, Illovo, Killarney, Rosebank, Midrand and Bedfordview offer a variety of new property types, well priced properties which performed well in property sales versus other areas despite a tough trading environment in 2018.In Johannesburg, the high cost of living and the need for security will start to see the trend of downsizing and empty nesting continue, according to Herschel Jawitz of Jawitz Properties.
Sandton is SA’s financial hub also known as “the richest square mile in Africa” has a number of new developments in the pipeline. Sandton is split into Central, Sandhurst, Illovo, Morningside, Sandton CBD, Parkmore amongst others which all has had incredible growth and has been looking a building site for the most part of 2016 to 2018. It is not uncommon to see cranes for miles from Morningside to Sandton Central. Some major developments are:
‘The Leonardo’ – Legacy (Sandton)
This particular development is getting a lot of attention in Johannesburg right now in Central Sandton. ‘The Leonardo’ is set to become home to the tallest building in Africa. At 230 metres tall it beats the old Carlton Centre developed some 40 odd years ago at 223 metres in the Johannesburg CBD.
‘The Leonardo’ 55-storey skyscraper includes eight luxury penthouses and multiple apartments. It is part of a mixed-used being developed by the Legacy Group headed up by Bart Dorrestein, CEO. Construction began 3 years ago and is scheduled to be completed by the second quarter of this year. It is sure to make a huge impact because of its location close to the business node of Sandton, Sandton Square, JSE and the convention centre.
‘Kgoro Central’ – Regiments (Sandton)
The other lucrative mixed-use development dominating Sandton is ‘Kgora Central’ which means gateway in South-Sotho. It is located directly above and adjacent to the Sandton Gautrain and offers investors a live, work and play option right in the hub of Sandton.Kgoro West’s is the rollout of Kgoro’s first phase of 304 residential apartments expected to be completed end 2020.
Sandton Gate – Abland (Sandton)
This will be a mixed use precinct Sandton Gate will be a comination of retail, residential and commercial. The residential composes of 370 luxury residential apartments starting from 2 bed and 2 bathroom between 89 and 159sqm priced from R2,950,000.
The Saxony Sandton – Saxony Developments (Sandton)
Saxony is an extraordinary development that aims to command the Sandton skyline towering across 29-storeys. The architecture differentiates from custom box shapes, and introduces a dynamic, triangular form with the facade being clad in glass, with brass coloured metallic screens. The premier address, unrivalled standard of living and architectural brilliance enhances the high-energy, on-the-go Sandton way of life.
Morningside saw an uptick in interest and property sales activity across various price brackets this year compared to the same period in 2017. Enquiries in Morningside sectional title homes reaffirm the value for money on offer and the desirability of the suburb, with properties priced from R950 000 for a studio or on- bedroom apartment ranging up to R1.9 million for a two bedroom and two-bathroom apartment.
Morningside is a predominantly sectional title market with 71.8% of the entire market stock comprising apartments, with 32.3% of the homes located within estates, according to Lightstone. For 2018 to date, the median price of a sectional title property is R1.55 million with prices having grown by +8.8% over the past five years.
146 Coleraine – FutureDev (Morningside)
FutureDev an independent turnkey developer that specialises inbuying land, developing, finance and selling in the greater Sandton and Bryanston area are making a big impact in the mid-priced market. Their latest development 146 Coleraine their latest of many developments offer 4-Bedroom townhouses with high quality finishes priced from R3,599,000.
Illovo Central – FWJK (Illovo, Sandton)
Another mixed-use development gem is the newly launched Illovo Central from FWJK which will consist of 152 brand new apartments and office units. The apartments range from 22m² studio apartments priced from R914,000 to 235m² 3-bedroom apartments and 4-bedroom penthouse apartments from 482m² to 651m². Brand new sectional title A-Grade office units, available for purchaseorlease which will range from 69m² to entire floors where the footplate is 1950m². The total office component is 4440m².
According to Urban Studies research, the Fourways node is experiencing strong development growth dominated by the extension of Fourways Mall to the status of a super-regional mall, which, along with other developments in the area will see it become one of the most dominant retail markets in South Africa.
Secure estates such as Steyn City, Dainfern, Fourways Gardens, Cedar Lakes and Fernbrook continue to be sought after as they are perceived to be secure with a number of lifestyle offerings that attract buyers. Steyn City estate dominates the Fourways skyline. It is located on the edge of Sandton, connecting Fourways to Lanseria, Broadacres and Midrand. Steyn City Parkland Residence comprises some 2000 acres of land currently being developed to create the largest parkland residence in South Africa.
The commercial expansion of Rosebank adds to the strong demand for residential property, especially for the rental market. This is largely due to the fact that there has been an influx of close to 18,000 more people into the Rosebank business node as the ongoing commercial development takes shape.
Park Central – Redefine Properties (Rosebank)
Another development attracting buyers is Park Central in Rosebank, also a thriving commercial hub, and as such, buyers looking to be closer to work opportunities find this location ideal. The development, which comprises 159 units consisting of studio, one, two- and three-bedroom apartments as well as prestigious four- bedroom penthouse apartments, is scheduled for completion in May 2019. Prices start from R2 million for studios to R19.6 million for luxury penthouse apartments, with some of these units including balconies and views overlooking the park.
Oxford Parks – Intaprop (Dunkleld, Rosebank)
Oxford parks is a 300 000 m2 mixed-use precinct comprising of 200 000 m2 commercial space (including ancillary retail) and 100 000 m2 residential space. The precinct is bounded by Oxford, Jellicoe, Cradock and Bompas Roads.
Kent Ridge – Renprop/Intaprop (Dunkeld, Rosebank)
Renprop in a joint venture with Intaprop are developing 80-unit executive apartments situated in Oxford Parks as the first residential development. It comprises a range of one to three bedrom units from 56m2 to 188m2 priced from R1,4 million to R7 million.
One on Whiteley – Amdec Group (Melrose Arch)
Melrose Arch is one of South Africa’s most exclusive mixed-use precincts, in Johannesburg developed originally by Amdec Property Group. Amdec has just launched One on Whiteley which offers apartments measuring between 43sqm and 121 sqm and priced from R2.1 million. It has over 150 units, consisting of one and two bedrooms, and is scheduled for completion in August 2019. Measuring between 43sqm and 121 sqm, the apartments are priced from R2.1 million. Rentals will start from around R20 000 per month.
HYDE PARK AREA
Sales in Hyde Park area in 2018 were brisk including a number of luxury properties priced over R10 million, with demand and the bulk of transactions concluded between R1.5 million and R4 million. Much activity has been seen in the price bands from R1 million to R5 million and from R5 million to R10 million across the various suburbs.
One97 – G5 Properties (Hyde Park)
These are apartments from 32sqm priced from R1,970,000. They include wooden flooring, engineered stone worktops and top appliances
One of Johannesburg’s more wealthy suburbs, Bryanston remains a popular choice for many buyers offering different property types including homes of varying prices, clusters and sectional title units as well as executive apartments.
Off-plan luxury apartments are priced from R3.5 to R6 million for three bedrooms, three-bathroom units and sometimes penthouse apartments.
Priced from R1.75 million to R3.85 million, the two-bedroom apartments offer convenient and secure, hassle-free living, ideal for investment, permanent residence or partial use when in South Africa.
The Edge – RenProp (Bryanston)
The Edge is a five-storey apartment block with 119 apartments positioned on Bryanston Drive offering a selection of one and two-bedroom apartments as well as penthouses ranging in size from around 57m2 to close on 170m2. Pricing is from R1,399,000.
Midrand is well located close to Centurion and Pretoria with easy access to the north, west, east and south of Johannesburg, as a result, it continues to attract buyers from all walks of life.
Midrand offers value for money with a variety of properties to choose from including sectional title units, secure estates, freehold homes and sought-after upmarket lifestyle estates such as the Waterfall Equestrian Estate, Blue Hills Estate, Kyalami Estates and Beaulieu. The sectional title market in Midrand continues to thrive with a number of new developments recently completed and some under construction by developers including JSE listed Balwin Properties and FOCE’.
In established areas, there has been a lot of activity in Noordwyk with entry level prices of R650 000 to R700 000 for one bedroom and two-bedroom apartments, as well as Crowthorne and Carlswald, with entry level prices of between R1 million to R2 million for two-and three-bedroom apartments. It is still possible to buy a studio apartment for R500 000 and one-bedroom units for R600 000 in suburbs such as Noordwyk, Erand Gardens and Sagewood, which see a lot of interest from first-time buyers and young professionals starting out.
The Whisken – Balwin Properties (Crowthorne, Midrand)
Balwin Properties is a listed JSE company with more than two decades’ experience in the South African property industry.The company’s developments in the area are very affordable, featuring lifestyle centres including gyms and restaurants and located along main roads. These include The Whisken Crowthorne just off the R55 and a short drive to the Kyalami Corner shopping centre, with units priced from R699 000 for one-bedroom apartments.
Kikuyu – Balwin (Waterfall Estate, Midrand)
In Waterfall, there is Kikuyu, priced from R849 000 and the more luxurious development, The Polofields, with prices starting from R2.029 million for two-bedroom, two-bathroom penthouse apartments and R2.129 million for three-bedroom, two-bathroom apartments with patios.
Umthunzi Valley – FOCE (Midrand)
has two new developments in Midrand, the Umthunzi Valley in Carlswald offering 215 luxury lifestyle apartments and priced from R1 150 million for two bedroom and one-bathroom apartments and Eagleton Apartments. In Kyalami, Leogem is developing Jacana, offering modern apartments priced from R1.568 800 million for two-bedroom units.
Infinite’ – Fatasy Developments (Bedfordview)
Bedfordview is considered to be the city’s ‘jewel of the east’ and is a highly sought of area for its leafy surrounds, generous space, and easy access to greater Johannesburg and Ekurhuleni. Infinité, Bedfordview is an exciting 10 storey, 200 unit development stylish new, high-rise residential development which has risen out the ground in a prime location opposite Eastgate shopping centre. Entry level price started from R1.175 million for a 57sqm studio apartment and from R1.575 million to R1.63 million for 76sqm one bedroom, one bathroom units. Two bedroom two bathroom units from 102 to 124 square metres in size are priced from R1.968 million to R2.83 million.
ABSA Towers & Jewel City – Diversity (Johannesburg, CBD)
Diversity Urban Property Fund has invested R2 billion into Jo’burg inner-city developments into the ABSA Towers Main and Jewel City to be redeveloped and linked to Maboneng. This investment, the largest in the Johannesburg CBD for some years, in the next 18 months alone, with its 30 storey ABSA Towers Main and Jewel City projects as well as R400m of residential accommodation under development in Maboneng, Divercity will launch more than 75,000sqm of new residential space in Jo’burg with more than 2,500 apartments in total.
Units will comprise of 13 two-bedroom, two-bathroom apartments priced from R2.2 million to R2.8 million, and two penthouse apartments comprising three bedrooms and three bathrooms, each with a private rooftop terrace and garden with panoramic views across Johannesburg, priced between R5.3 million and R5.7 million.
The 24-hour economy
As people increasingly adopt a live-work-play lifestyle, we are starting to see the growth of decentralised hubs in which there is a growing 24-hour economy. This is a major positive for property owners as it means that it is possible to get more use out of an existing property – not just for working or living but instead a single building or development is used for living, working, shopping, exercising and entertainment.
For investors, in today’s economic environment it’s important to consider understanding the type of property that is in demand for rent. For example first-time apartments and homes, student accommodation, retirement units and high-end sectional title units (for downsizers and lifestyle changers). We know that properties at the right price, right location, ease of access and avoidance of any congestion factors will always be in consistently in demand.
SOURCES:Stats SA; Lightstone; Pam Golding, Jawitz; Rawson; RE/MAX; Legacy;
FWJK; FutureDFev; Regiments; RenProp; Diversity: Amdec
Don’t miss REIM March edition where we fearure Cape Town investment hot spots and new developments; April we feature Kwazulu-Natal; May we feature Pretoria and June Port Elizabeth and other key nodes