Increasing expenditure on transport is seeing buyers and tenants opting to live closer to work, schools
South Africa’s rising fuel price is having a huge impact on the country’s property market, with mixed-use developments and suburbs close to commercial nodes now more attractive than ever before.
The popularity of mixed-use developments has been a growing trend for some time, but not everyone can afford to rent or buy into these new, modern places. For this reason, suburbs situated close to work and retail opportunities are just as sought-after.
“With growing congestion in Cape Town, as well as rising utility and maintenance costs, more homeowners are opting for a lock-up-and-go lifestyle in a live-work-play business node,” says Sandra Gordon, Pam Golding Properties research analyst.
Over the past two years, this increased traffic congestion has seen an acceleration in the decentralisation of business nodes and more people are opting for well-located properties that reduce the lengthy daily commute to work and school, she says.
It’s a growing trend worldwide that people want to live close to where they work, says Chris Tyson, managing director of Tyson Properties. For this reason, one will continue to find buildings with ground floor as retail, offices above that, and apartments on top.
“We will also see a lot more commercial development in residential areas.”
He says this is a worldwide trend.
“For example, in London, you’ll find new and old buildings next to one another. There is a global move towards work-live-play, and people enjoying being able to go to restaurants after work without a long commute.”
Furthermore, South Africa’s fuel prices are “playing a huge role now with regards to where people choose to live”, Tyson says. Cape Town’s Sea Point area is a “prime example” of this growing trend, with new commercial and retail developments fitting in residential apartments above. It is rejuvenating the area.
“It is now a popular area that has been driven largely by commercial and retail. You will also find bike racks outside buildings as there is a big shift towards a more European-type lifestyle.
“This kind of rejuvenation and redevelopment pushes up residential property prices so it is definitely positive for property owners,” says Tyson.
While commercial and retail developments can have a huge negative impact on neighbouring residential property values if not planned, designed and executed correctly, the opposite is also true, says Harry Nicolaides, chief executive of Century 21.
“Developments with appealing aesthetics that have been well planned so as not to block views and natural sunlight in nearby or neighbouring residences, and with proper control of traffic volumes can have a positive effect on surrounding residential property values.
“With employment opportunities severely limited in a stagnant economy, residents in certain areas are forced to travel a distance just to remain employed. Making matters worse are rising transport costs.”
Nicolaides says it is “logical to conclude” that most people would prefer to work closer to home. If new commercial developments occur within their areas and result in more job opportunities, demand for homes in these suburbs will increase.
“This will impact positively on the value of their homes.”
Live-work-play developments prove to be the recipe for future successes
Century City on the N1 is the “quintessential live-work-play precinct” with more than 60 000 people living and working in the area, says Paul da Silva, Pam Golding Properties agent for Century City.
This “city within a city” has various attractions, including parks, accessible public transport, shopping centres, schools and recreational activities. Da Silva says the precinct offers a range of accommodation for the full life cycle, from units for first-time buyers to lifestyle retirement options.
“Century City is ideally located on the N1, close to a premium shopping centre and many corporate offices, but without the overcrowding and congestion one would experience in Cape Town’s CBD.”
Mixed-use developments will “continue to be the recipe for success going forward”, says John Chapman, a director of the Rabie Property Group, the developers behind Century City.
Apart from mixed-use developments, property markets in Claremont and the Tyger Waterfront are prime examples of how commercial developments impact properties and lifestyles in the neighbouring suburbs, says Pam Golding Properties’ Sandra Gordon.
Claremont’s CBD and surrounding suburbs are flourishing because of easy access to public transport, convenient location to popular schools, and the stability of Cavendish Square as a core business node. And, with its prime location, Gordan says Claremont has attracted more businesses to its CBD, and “thus made the surrounding property more appealing”.
Looking at this appeal, she says Upper Claremont has become home to some of the most expensive residential property in the southern suburbs on a rand per square metre basis with developments catering to the growing need for secure, bespoke estate living in the suburb.
Similarly, The Tyger Waterfront property market – where apartments are within walking distance of the Tygervalley Shopping Centre and surrounding office blocks – has shown steady price growth in recent years, says Annien Borg, Pam Golding Properties managing director for the Boland and Overberg.
The average sales price of apartments is at R1.3 million thus far this year. Sectional title prices have shown 74.8% growth over the past five years.