South Africa’s property industry may well be under pressure owing to the recessionary state of the economy, but real estate remains an attractive investment opportunity – especially in major off-plan developments.
“Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth,” says American businessman and author Robert Kiyosaki.
One area where the industry is seeing dramatic growth is in mixed-use, new urban developments – which are seeing huge returns in capital before ground has even been broken. Likewise, Amdec Property Group managing director Nicholas Stopforth agrees that real estate remains a solid investment, if you’re willing to ride out the ups and downs in the market.
Our goal is to set our urban developments in the same league as some of the world’s most iconic mixed-use precincts,” he shares.
To achieve this, Amdec searches for inspiration globally – looking to the likes Hong Kong, Sydney, London, and New York.
“These phenomenal developments provide inspiration and learnings. We implement their best practices into our own developments – creating precincts defined by safety and security, design, convenience, connectivity and walkability,” he adds.
Both local and international investors are jumping on the urban development bandwagon. For international investors, in particular, South Africa offers significantly lower prices for initial purchase compared to similar developments around the world.
“South Africa offers incredible property values and huge returns for investors looking to expand their offshore property portfolios and there is so much potential here,”explains Stopforth. “We want to continue to invest in this country with the aim of attracting potential investors from around the world.
In New York, properties in mixed-use developments like 1 Central Park and 1 Hyde Park are valued upwards of R1million/m2. Sydney boasts more reasonable rates at R320 000/m2 at Miller’s Point or R200 000/m2 at Darling Harbour. While Repulse Bay in Hong Kong is valued at a whopping R2.1million/m2. In Cape Town, our own Waterfront is valued from R200 000/m2.
The Amdec Group’s major developments Melrose Arch and the soon-to-be-developed Harbour Arch are based on new urban principles, “where lifestyle meets real estate”. The core appeal of these developments is that they offer a walkable precinct, with all daily needs within walking distance – including office space, restaurants, shops, hotels, banks, medical services, health clubs, entertainment and more.
“We believe in a better way of living, working, relaxing, and interacting so create mixed-use developments that offer an amazing living experience and solid real estate returns,”says Stopforth. “These smart cities aim to foster enjoyment, connectivity and a greater sense of wellbeing.”
Construction of the first and largest smart city 5,8 hectare development of its kind, Harbour Arch is due to commence before the end of the year. The Amdec Group’s latest R10billion development in Cape Town’s foreshore area, will be developed based on the same learnings of the award-winning Melrose Arch precinct which Stopforth notes is “arguably the safest precinct in South Africa”.
It has achieved over R1.2 billion in sales, with 95% of its 432 units sold within 7 months of launching with apartments selling for R50 000 and R75 000/m2. Two Marriott International hotels will be included amongst the six individual towers.
“There is a strong demand in Cape Town’s city centre from young investors looking for a safe, convenient, urban lifestyle,” says Stopforth.
The Yacht Club – another development by the Amdec Group – has already shown huge returns for initial investors. Early property investors who bought into the mixed-use scheme enjoyed a significant return on investment in the first year, and exceptional capital growth in the two-year construction period.
The 170-apartment mixed-use development – which includes an AC Hotel by Marriott and commercial space – launched at R48 000/m2 in September 2015, with the last units selling for R75 000/m2 just over a year later.
The success of The Yacht Club is a positive indicator that mixed-use developments in the CBD are in demand.
“Using the Yacht Club as a benchmark, now is the time to invest off-plan in developments like Harbour Arch,” says Stopforth.
“There is a clear demand for these types of developments. Having sold in excess of R2.5 billion in residential apartments all within mixed-use developments in the last two years – R1,2 billion at Harbour Arch, R650million at the Yacht Club and R650million at One on Whiteley – it is clear that our new urban developments don’t only offer an excellent opportunity for investors, but they have a hugely positive impact on the economy too, driving job creation in the construction, hospitality, and retail sectors, concludes Stopforth.
This article was first published by Real Estate Magazine on 6 July 2018.