The depressed economy has taken its toll on the summit of the market with prices dropping. By Bonny Fourie
The luxury property market, and those who play in it, might appear to engage in a completely different game to the ordinary South African, but the economy is a great and fair referee.
Despite their multimillion-rand values and appeal to the country’s affluent, property prices in this market are being hit just as hard by the economic climate. Demand has also dropped.
Being the sector that generally bears the brunt in a downturn, Yael Geffen, chief executive of Lew Geffen Sotheby’s international Realty, says the top end of the market “isn’t faring very well”, with a “significant” drop in sales volume and prices.
“However, savvy investors and bargain hunters are starting to take advantage of the current market, and with prices having crashed by up to 30% to 45% in some areas, they are finding excellent deals.” Seeff Property Group chairman Samuel Seeff says very little has changed for the property market overall this year, with the high-end luxury areas, especially, still experiencing slow demand and pressure on prices.
“While there will always be the odd highvalue sale, as has been the case this year, when you look at the overall figures, the market remains flat and is still trading lower than in 2017 and 2018.”
He says the upper end of the market performs differently to the rest because luxury property buyers do not need to buy, and rather than pay the high transfer duty and transaction fees, they are “staying put” and renovating. However, this sector of the market is also affected by the economic direction and confidence, so wealthy buyers are holding back or only investing half of what they would have, perhaps opting to take the balance offshore.
“That said, agents are hoping for an uptick with the onset of the summer months, as well as higher foreign demand with the tourist high season approaching,” he says. It is this same hope that has Keller Williams Premier property specialist Ronak Spamer “very excited”.
“While prices in the luxury range have gone down significantly, we expect the tipping point to be reached around mid-February next year.” Spamer, who focuses on the Atlantic seaboard area, says overseas buyers, particularly, are looking to buy “bargain” properties listed at R25million to R30m as opposed to the R50m they would fetch in a good market.
“Now is the time to buy if you are in this price category. The fact that luxury properties are far below market value is especially appealing to foreign buyers from Europe (German, Swiss and Dutch) and from African countries such as Gabon, Botswana and Nigeria.”
He also believes the peak summer season will see demand increasing. Mike Greeff, chief executive of Greeff Christie’s International Real Estate, says although sellers are taking a longer time to sell at their desired prices, buyers are having a better time purchasing properties that might previously have been outside their price range.
“Overseas/international buyers stand to possibly benefit the most. They could be looking at getting even more value for their money.” Citing PropStats data, Francois Venter, a Seeff areas specialist, says more than R200m in sales in the luxury market have been concluded this year, at an average selling price of more than R17m.
Greeff says: “There is usually a rise in buying activity in the warmer half of the year. People look to buy in temperate climates, and to foreign and inland buyers, Cape weather is attractive.”
Atlantic seaboard the jewel in the crown
The Atlantic seaboard is a premier luxury real estate belt which consistently achieves the highest prices in the country, even during the current downswing, says Ross Levin, managing director for Seeff Atlantic Seaboard and City Bowl.
“Propstats data, for example, shows that about 20 sales above R20 million have been recorded for this year at a combined value of just under R641m and at an average selling price of just more than R3m.”
Levin says six of the country’s top 10 suburbs are located on the Atlantic seaboard, namely Clifton, Bantry Bay, Fresnaye, Camps Bay, Mouille Point and V&A Waterfront Marina. Llandudno is also in the top 10. Prices here range from about R4m to as much as R100m, but there are “very exclusive” properties that have sold close to R300m and can go as high as R500m.
The average price on the Atlantic seaboard is R30m to R50m, says Keller Williams Premier’s Ronak Spamer. Luxury properties are also found in Constantia Upper, Bishopscourt and surrounding areas, says Greeff’s Mike Greeff.
Average selling prices here, and on the Atlantic seaboard, from August 1 last year to August 1 this year, according to Propstats, were:
- Atlantic seaboard: R17 731 678.
- Constantiaberg: R13 661 364.
- Bishopscourt: R19 682 727.
In Bishopscourt, properties are set across large erfs, many of which are greater than a 1 000m², Greeff says. Hermanus and Stellenbosch are among the Cape Town areas with the most luxury properties, with the highest concentration in Val de Vie and Pearl Valley estates, says Yael Geffen of Lew Geffen Sotheby’s International Realty.
“There are also nodes along the Garden Route where there is still a healthy demand for luxury, including Plettenberg Bay and the enclave of St Francis Bay, where there were five transfers in the upper price band of R6.5m to R15m between April and June this year.” In Plett, she says stock levels have risen slightly, by about 4%, and there are still active buyers.
Prices are under pressure due to this and the economy but the semigration trend has “remained constant”. Basil Moraitis, of Pam Golding Properties on the Atlantic seaboard, says the market here is making a recovery, with its office experiencing its busiest August on record. In Bishopscourt, the group concluded eight sales from April 1 last year to April 1 this year, ranging from R7.8m to R41.3m.
High-end defined by more than just price
Beauty is in the eye of the beholder, they say. And it seems this notion is also held in the property market, where the definition of “luxury” can depend on who is defining it.
Luxury homes are “generally considered” to be properties priced from R8million, with super luxury properties priced from R10m upward, says Greeff’s Mike Greeff. “These properties, in most cases, are set in an affluent area surrounded by other affluent properties and have a reputation for being safe, secure and in a sought-after location.
These properties usually have several desirable features, in line with the standard of the area.” For Lew Geffen Sotheby’s International Realty’s Yael Geffen, “anything priced from R40000/m2 , is luxury”. By these examples, one would assume luxury properties are classified according to price. But this is not necessarily the case, says Ronak Spamer of Keller Williams Premier.
“A luxury property typically features high-end finishes, with attention to detail in layout and design, in a sought-after area. However, it is not only based on size or price. A one-bedroom penthouse listed at R5m and up can be a luxury property, (as can) a 17-bedroom mansion costing R400m to R500m.”
The definition of luxury property is “very personal”, says Seeff’s Samuel Seeff. “What constitutes luxury to one person is entirely different to what it might mean for another person. For ordinary buyers, R3m for a house might be considered a luxury, while this might the R10m-plus price band for high-end areas, such as the Atlantic seaboard.”
However, they are classified, luxury properties boast great locations and often beautiful views, says Geffen, adding that other features of such homes include:
- Tranquil, scenic surrounding neighbourhood, usually with easy access to top-class amenities.
- Immaculate, top-of-the-range fittings and finishes, many with cutting-edge, integrated technology.
- High-end security systems and features. Imported finishes, Italian marble, automated features, high-end security and furniture and pools are also on offer in luxury properties, says Spamer.
Luxury homes normally feature four or more bedrooms, and bathrooms to match, says Greeff. They have high-quality features and fittings in the kitchens, bathrooms and living areas, and commonly have quality flooring, French doors, and verandas.
“These homes normally have excellent views and vantage points in almost all the rooms. There are stateof-the-art security systems and, in some cases, a 24-hour guarding service on site.”
Noteworthy features in some homes on Pam Golding Properties’ books include spacious entertainment areas, top-quality finishes throughout, a cinema, wine cellar, parking for several cars and hi-tech security, according to Samantha Nel, the group’s southern suburbs sales manager.
Demographics: Spreads of buyers
Buyers of luxury Cape Town properties are a mix of locals, other South Africans and foreign buyers, says Pam Golding Properties’ Samantha Nel. And those who are selling usually do so to downscale when their children are no longer at home.
The general demographic of these luxury property buyers and owners are high LSMs, and they are generally business heads and leaders, aged 45 to 65, says Greeff’s Mike Greeff. “There is a multitude of buyers of luxury properties who are looking to purchase properties in our province. In our experience, we are finding many expats are returning from England to purchase in South Africa.”
However, there has been an “interesting shift” in the owner demographic, with many buyers in their mid-20s, says Keller Williams Premier’s Ronak Spamer. Yael Geffen of Lew Geffen Sotheby’s International Realty says buyers of luxury properties are largely bargain hunters.
They are well-established professionals, often well-educated, and “aspirational high achievers with discerning taste”.
Up for sale: Spoilt for choice
Luxury properties on the market:
- Six-bedroom, five-storey villa in Llandudno: R44m (Keller Williams Premium)
- House in Beachy Head Drive, Plettenberg Bay: R55m (Lew Geffen Sotheby’s)
- Four-bedroom home in Camps Bay: R85m (Pam Golding Properties)
- Six-bedroom home in Fresnaye: R75m (Pam Golding Properties)
- Six-bedroom home in Constantia Upper: R69m (Pam Golding Properties
- Home in Constantia Upper: R62m (Greeff Christie’s)
- Bishopscourt: R27.5m (Greeff Christie’s)
- Clifton: R172.5m (Seeff)
- Clifton: R72m (Seeff)
- Clifton: R65m (Seeff)
- St Francis Bay: R15.85m (Lew Geffen Sotheby’s)
- Plettenberg Bay: R55m (Lew Geffen Sotheby’s).
Multi-million sales: City of opportunity
Luxury properties recently sold:
◆Clifton: R45million (Seeff).
◆Bantry Bay: R58.5m (Seeff).
◆Fresnaye: R60m and R55m (Seeff).
◆Camps Bay: R36m (Seeff).
◆Mouille Point: R27.8m (Seeff).
◆V&A Waterfront Marina: R18m (Seeff).
◆Winelands: R17.5m (Lew Geffen Sotheby’s).
◆Plettenburg Bay: R35m (Lew Geffen Sotheby’s).
◆Bishop’s Court: R41.3m (Lew Geffen Sotheby’s).
◆Constantia Upper: R24m and R19.5m (Pam Golding Properties).
◆Fresnaye: R59m (Pam Golding Properties).
◆Mouille Point: R19m (Pam Golding Properties).
◆Clifton: R100m (Seeff).
◆Bantry Bay: R290m (2016) (Dogon Group Property) and R238m (2016) (Pam Golding Properties).