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Atlantic Seaboard freehold up R1m and 17% ROI on resale

FRESNAYE - R125M (1)The average price of freehold houses on the Atlantic Seaboard for the first half of 2016 is up by R1,1m compared to the same period last year. This is according to Billy Rautenbach, sales manager for Seeff’s Atlantic Seaboard and City Bowl operations, who said this is despite a year-on-year dip of about 9% in the number of sales.

“While the market is no doubt toughening up, freehold houses are still hot sellers with sales since the start of this year already topping the R1,166bn value mark,” he said. “The average sales price meanwhile stands at R13,1m (exclusive of the recent extraordinary R290m sale) compared to just under R12m for the first half of 2015.”

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Of the 91-odd sales recorded on Propstats so far for this year, only about 11%, or 10 sales, fall in the zero to R5m price band. Most of the sales have been in the mid-market areas of Green Point and Sea Point. Houses in this price segment are very difficult to find and basically sell almost as soon as they hit the market according to agents, Jessica Rother and Debbie Koping.

“The R5m to R10m price band was by far the busiest, accounting for almost half of all sales with about 40 units sold at an average price of around R8m, compared to R7,6m during the same period last year,” they said. “The bulk of the sales have been in Fresnaye (13) and Camps Bay (10), and a single sale in Clifton.”

The R10m to R20m price band accounts for about 30% of all sales (28 units) and an average price of about R13,5m, down from last year’s average of R14,1m. The bulk of the sales have been in Camps Bay (12 units), followed by Fresnaye (six units) and only two sales in Bantry Bay.

Notably, there were also five sales in Green Point and three in Sea Point, said Rautenbach, adding that this points to a rise in the value of freehold houses in these two areas.

“Any well-priced freehold house below the R15m price mark in the Fresnaye and Bantry Bay area still attracts a lot of attention,” said agent, Karen Lurie. “In Fresnaye, for example, more than 80% of sales were below this price mark and almost half of all these sales were concluded within a month of listing.”

In the R20m-plus sector of the market, 15 units have been sold compared to 13 for the same period last year.

“The total value generated of R755,291m accounts for more than half of the value of all freehold house sales on the Atlantic Seaboard this year,” said Rautenbach. “The average price for this sector stands at R33,2m, slightly up on last year’s average of R32,5m.”

The highest number of sales of R20m-plus were made in Camps Bay (seven units) followed by Bantry Bay (three units) and Fresnaye and Clifton at two sales apiece.

Lap of luxury

Luxury market specialist, Lance Cohen, says the level of confidence in the high end of the market remains high, as demonstrated by the fact that prices of R100m to just under R300m have now been achieved there.

Cohen says that the mini-boom of 2013 to 2015 pushed the top end of the market to a whole new level of desirability and value.

“Investors are now so confident that the luxury villa in Nettleton Road sold early last year for R111m is now back on the market for R150m and the value is there,” says Cohen. “The R100m-plus sector of the market that is now the real cream on top of the area. Of the around a dozen homes on the market priced at R50m-plus, only about four top the R100m mark: two apiece in Clifton and Fresnaye.”

Freehold value holds

Rautenbach says that while freehold house sales only comprise about 20% of the overall market in unit terms, it accounts for about 40% of the total rand value generated since 2000. Freehold houses also still achieve the highest prices on average.

An analysis of Lightstone transfer data reveals that in the 2000 to early 2015, some 5,525 freehold houses sold to the combined value of just over R26,725bn. The 2001 to 2007 period were the real boom years with between 378 to 530 houses sold annually.

In the post-2007/08 period, the market peaked in 2014 with 339 sales worth just over R3bn. The average sales price of a freehold house meanwhile more than doubled from just R5,531m in 2007 to about R13,1m currently.

Sellers have also had a good run since 2007, with an average return on investment of around 17% per annum over an eight-year holding period.

The mid-market areas performed best overall with Three Anchor Bay sellers achieving the highest returns (21% over seven years) followed by Sea Point (18% over eight years), De Waterkant (17% over eight years) and Green Point (16% over eight years).

Bakoven meanwhile achieved 17% and Camps Bay 14%, both over a nine-year period. Fresnaye achieved 17%, Clifton 16% and Bantry Bay 15%, all measured over an eight-year period.

Photo: This 1,000m² villa in Fresnaye towers over the ocean and boasts state-of-the-art design and finishes that compare with the best of Hollywood. Priced at R125m, it is on the market through Seeff.


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