South Africa is officially in a recession, and businesses and consumers are certainly feeling the pinch – and it doesn’t help that in 2018 almost everything costs more.
The property market is also suffering with a slowdown in house prices and with stock being featured for months on end – specifically in Cape Town. So if you’re selling your home, you might find this to be a more difficult task than in recent years, says Nicholas Stopforth, Managing Director of Amdec Property Development.
FNB’s recent Property Barometer Report found that 96% of properties are being sold below their asking price, compared with a much lower 78% in 2014. It also confirms that houses are taking an average of sixteen weeks to sell – significantly longer than the average of twelve weeks recorded between 2014 and 2016. However, despite the slowdown in house prices, mixed-use developments continue to buck the downward trend for property investment, with the Amdec Group’s new R10 billion mixed-use development, Harbour Arch, being moments away from selling out, says Stopforth.
“We have a mere nineteen residential units remaining, having launched just short of a year ago, and considering construction only kicks off in 2019. Cape Town is a strong market with ongoing demand from local and international investors, so if you’re willing to ride the property market ups and downs, investing in off-plan developments will see huge returns long before ground is broken,” he says.
Stopforth says the core appeal of mixed-use developments is that they offer a range of lifestyle benefits to urban living. The drawcard is the walkable precinct with all daily needs, including office space, restaurants, shops, hotels, banks, medical services, health clubs and entertainment within walking distance.
“These types of development are taking inspiration from international trends paralleling global demand for investment in locations where you can live, work and play,” says Stopforth.
“We are utilising space to its greatest capacity in major city centres and offering a safe, convenient urban living experience, but they also boast fantastic real estate returns.”
According to Stopforth early investors in both the Yacht Club and Harbour Arch are already seeing significant increases in capital. Both are located in Cape Town’s Foreshore area, which is highly sought after by young professionals, businesses, and international investors.
“There will always be dips in the property market. When times are tough, people are understandably less inclined to spend money. You just have to either wait it out or find the right investment property,” says Stopforth.
“Now is a superb time to look into new developments where you can buy off-plan and expect to see a steady increase in value over the coming years.”
This article was first published by Property24 on 27 September 2018.