#ExpertsTalk: These are Joburg’s development hotspots for 2018
In addition to ongoing development across Gauteng, large scale growth is especially predicted for the northern and north western suburbs of Johannesburg where platforms such as Airbnb are creating interesting trends in the Sandton property market in particular.
Dave Lewis, Seeff Sandton’s developments manager, said in the Sandton CBD and surrounds there is a great drive from both developers and the municipality to increase the number of residential homes.
“The council is very supportive of increased density in the area, especially along main roads, as the demand for housing close to the ever-expanding commercial hub of the Sandton CBD is growing rapidly,” he said. “While in the past there were maximum density restrictions, these days council is imposing minimum density restrictions.”
Bryanston and Morningside are being developed at a rapid rate, as the sizes of the stands in the area are good for development and the existing services infrastructure is in place already.
“Here we are especially seeing a lot of townhouse and apartment developments going up,” he says.
“Interestingly, though, we have also seen average price per square metre coming down in the last year as there is a lot of competition in the market.
“The struggling market along with many options to choose from has put buyers in a very strong position and while R25,000/m² two years ago was seen as good value in Bryanston for an apartment, that is now very expensive and a competitive market-related price is closer to the R22,000/m².
“In the more suburban parts of these areas, or local roads, the council is now supporting densities of 20 units per hectare whereas this time last year it was a maximum of 10 units per hectare.
“Here we are seeing many full-title cluster developments of four to eight units coming up and the prices being achieved are very high, often exceeding the R10m mark.”
Lewis said the upturn in the short-term rental market was good for investors who were realising higher returns for their money with something like Airbnb than what they get with placing longer-term tenants.
“This is one aspect that is keeping them interested and is aiding in sales still ticking over,” he said, noting that developers were now designing projects to accommodate this type of investor and some bachelor units are being tailor-made for short-term rental demand. “Illovo Central, which will begin construction next year, has a unit type just 19m2 in size that was specifically designed with the Airbnb model in mind.
“The building itself has all the amenities that you would expect from a high-quality hotel, with a rooftop pool and bar area, and 15 storeys high giving immaculate views. A gym, boardrooms and a spa all in the building and all available to the tenant, while the tenant is paying a significantly lower rate than what he would at a five star hotel in the area.”
Randburg targets first-timers and investors
Randburg is home to a collection of well-known Johannesburg suburbs developers are constructing affordable, entry-level homes, targeting first-time buyers and buy-to-let investors.
This is according to Chris Hajec, Seeff’s MD for Randburg, who said his office had seen a boom in residential development in Randburg despite – and actually in reaction to – the dip in the market after the downgrade.
“2018 does not seem likely to manifest a slowdown of any discernible level,” he said. “The model of higher density, affordable, mixed one-, two- and three-bedroom unit developments which have been implemented by well-known developers like Reeflords and Renico has proven to be so successful and in demand, that the trend seems likely to increase this year.
“Developers seeking to stay active despite the downturn go for that segment of the market where they know demand has remained relatively high because of affordability and the broad range in consumers to whom these types of units appeal.”
As two prime examples Hajec cites Randpark Ridge and North Riding as well-positioned and affordable locations to roll out three-storey apartment and townhouse complexes which cater to the R600,000 to R1,3m market.
“The imperatives in ensuring a successful development boil down to reasonable land costs, securing property which is appropriate for a higher density and pricing the properties affordably for your target market,” he said.
Reeflords, a Chinese-based developer, recently broke ground on a 312-unit development in Randpark Ridge situated at the corner of CR Swart and Beyers Naude.
“The comprehensive marketing blitz mentioning extras like a clubhouse, fibre, pool, gym and security, in advance of the launch of Orchid Ridge did not only appeal to the end users who would make the conveniently located development their home, but also to the investor by highlighting the above-average investment return and competitive investment capital in Randpark Ridge,” he said. “This highlights that buyers today are hyper sensitive about the finishes and extras and it can make or break a decision to go with one property or another.”