'It will start at the top of the market in Sandton and Melrose Arch, north of Johannesburg, and spread out from there,' says Trafalgar Property and Financial Services CEO Neville Schaefer.

In Sandton, north of Johannesburg, a plan for a R600m tower development, Michelangelo Towers, is at an advanced stage.

Residential property sector players believe Michelangelo Towers will propel the new wave of development of luxury flats with price tags of up to R30m a unit in emerging and up-market business nodes.

Schaefer says it could set a record, achieving rents of up to R50000 a month each for twobedroom units. This will encourage other institutional investors to convert offices or build new units in Sandton and other newer business nodes such as Claremont in Cape Town and Umhlanga in Durban, he says.

While the Michelangelo Towers project might be seen as part of a recently established trend towards exclusive sectional title developments in decentralised areas, its unit price tags, ranging from R1,2m to R25m, makes it exceptional.

Due to start construction in the next few months, Michelangelo Towers boasts 90 luxurious flats on 28 floors. Under the stewardship of property developer Legacy Group Holdings, the development is said to have already sold 85% of its units. Below the flats will be a mix of commercial and retail activity, plus 660 parking bays.

Legacy Group chairman Bart Dorrestein says the development is a first for Johannesburg. Sandton's resources and infrastructure are drawing highincome earners who will use the flats during the week and retreat to holiday homes at weekends.

His buyers are a mix of local and foreign top businessmen.

Schaefer says after many years of shunning residential property, institutional investors are about to embrace it again, adding flats to some key commercial properties.

He says many more players are quietly extending plans for projects in Sandton and Melrose Arch, their interest triggered by poor office performance and the boom in the residential sector.

Old Mutual, Sanlam and Southern Life were big investors in flats to rent in the 1960s and 1970s but were scared off by rent control in 1966, he says. This, along with sectional title development, had reduced the proportion of high-density flats available to let over the past 35 years.

Flat rentals will again offer a growing choice in well-positioned sites in the main cities as investors discover that properly managed residential property gives excellent returns and carries a lower risk than commercial property.

This is because the large number of individual units means that there is little danger of a high proportion of a building being vacant at any time.

Business Day