By Joshua Parsons, Harcourts Atlantic
My Love for Cape Town Property 🏡
I moved to Cape Town a little over a year ago and I instantly fell in love with all that this vibrant coastal city has to offer. The Mother City has something for everyone with some of the most exquisite hiking trails, a world-class restaurant scene, beautiful vineyards, and of course the idyllic beaches. Every day I find something new, whether it is a restaurant, a group, or a secret sunset spot, this city will never stop surprising you.
Real estate has always been in my blood and the further I tried to move away from the industry the faster it reeled me in. Although I have only been working in real estate for a little over 8 months, what I have learnt has been invaluable. I started off my career as the Social Media Manager for Tyson Properties, which was a very young and exciting property brand to be working with. However, when my mother gave me the opportunity to join her and sell some of the most exclusive Real Estate in South Africa at Harcourts Atlantic, I simply couldn’t refuse.
Every day I wake up with excitement as I know I will get to drive into Camps Bay again and see a view that never stops taking my breath away. The number one thing that I have been focusing on since starting my journey as an agent is building relationships with homeowners in the area. I, 100% believe, that to be successful in this line of work you have to focus on connecting with your market. As a colleague recently told me, sales is a contact sport.
The South African Lifestyle
I love my country and I am passionate about sharing its beauty with the world. You can travel far and wide, but I promise you that you will never find something as unique as South Africa. The diverse landscape offers mind-blowing experiences that range from shark cage diving, world-class Big Five safaris, famous surf spots, desserts, caves and views that some people wait a lifetime to see.
They call it sunny South Africa and it is not hard to see why with the beautiful climate that the country experiences. A big part of the South African culture involves outdoor entertaining, where a braai (barbeque) is at centre stage. Luxury properties offer exquisite outdoor entertaining areas either in beautifully manicured gardens, on rooftops or large decks and balconies that overlook some of the most magnificent scenes.
What draws foreigners to South Africa is the desirable lifestyle that comes at a fraction of the cost when compared with Europe and North America. This comes as a result of the favourable exchange rate that allows for exceptional quality of life. With remote working becoming the new norm more and more foreign nationals are now considering calling South Africa home.
The Property Market in South Africa
Conditions at the moment favour buyers’ in South Africa with the low interest rates and an abundance of properties currently on the market. Many tenants have now realised that it is more cost-effective for them to own a home rather due to the favourable lending conditions. This has meant that there is a larger number of first-time buyers and properties in the lower price brackets are moving quickly. Properties under the value of R1 million do not have any transfer duty taxes attached to them, which makes it even more affordable for first-time buyers and investors to get into the market.
From my personal experience doing valuations of properties over the past week, it has been amazing to see how the average sold price of property has grown over a ten year period. A property that was bought in 2010 for around one and a half million rand is now worth more than four million Rands. Another property that was bought in 2000 for R460k is now worth around five million Rands. This comes back to something that my father who is a wealth planner has drilled into me from the time I started earning my own money, which is that it is not about timing the market, but rather time in the market.
With the oversupply of property in the current market, serious sellers are willing to negotiate on the price of their properties. This means that if a buyer finds a good property they will more than likely be able to negotiate on the asking price. With this being said the current market presents a wonderful opportunity for those looking to get into the market. Banks also require less of a deposit, due to the good interest rates, which now means that less capital is needed to finance the purchase.
Different Investment Options
My advice to investors and first-time buyers would be to buy property in up and coming areas, where the prices are still low. As more and more people move to that area and it becomes more desirable, the value of your property will most certainly appreciate. For investors that are looking for a good rental income, it would also be valuable to do your research and find out what areas are in high demand. This can be done by talking to local rental agents and looking at the local trends of what people are looking for in a home at the moment. The next thing is to make sure that there is a good supply of reliable tenants in that area.
With Cape Town being a hot stop for many travellers over the years, investors can also consider a short term rental investment. Due to the COVID-19 pandemic, the strong tourism industry has collapsed due to travellers not being able to move around. However, as soon as people can travel more freely, the empty hotels and B&B’s will be full once again. This presents an opportunity for those that are looking to get into this lucrative business by buying an Airbnb investment property, which can be found at a good price in the current market due to many Airbnb properties sitting empty for the last 12 months due to lockdown. The rental income from an Airbnb property that is full for most of the tourist season is far greater than that of a long term rental income, however, the risk is a lot higher. With platforms like Airbnb and Booking.com, it is now easier than ever to find short term tenants that are travelling through the area. With the travellers bringing foreign currency and a favourable exchange rate it creates a win-win situation.
The next option for people looking to make money in the current market is through property development. There are three ways in which people can get involved in property development. The first is by finding a good up and coming area where you can buy a house or piece of land and get permission to demolish that home and build a block of flats, this can be difficult as it requires a large amount of capital and funding. If done right, you can turn one home into many apartments and get a great return. The next option would be to buy a property in a good area that needs work done to it. You can then renovate that property and sell or refinance the property and sell it for more than you bought it. This can be a great way to make money off of the property, especially with favourable lending conditions. The next option for investors is to buy a large home and create a subdivision. This can be done by splitting the home into two homes. Or turning a large home into several apartments, which would be easier to sell or rent out.
This is Just The Beginning
I believe that the South African property market is a land of opportunity for people that are interested in creating wealth through property. The reason for this is that Cape Town is a vibrant city that draws people because it offers up an exciting yet balanced lifestyle. There are also many old homes that have enormous potential for renovations and subdivision. Cape Town is a tourism hotspot and AirBnB is a great way to earn an extra income off of an investment property. The City is also well maintained and there is excellent public transport and facilities, which make it an easy place to live, work and play. I predict that within the next few years property prices will rise due to the high demand for the pristine lifestyle that this city offers its residents.
Harcourts was founded in 1888 and has been at the forefront of the property industry for over 125 years. This award-winning brand has been built upon the foundation of putting people first, which makes its service stand out from the rest. Harcourts is a global company with over 900 offices in 9 countries including New Zealand, Australia, Indonesia, Fiji, China, Hong Kong, Canada, South Africa and the USA, all providing a full range of real estate services.
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