Pam Golding Properties Western Cape metro region MD, Laurie Wener, cautions that there is still a long way to go.
“The recession took its toll on developments, especially in the off-plan purchase category, which constitutes the majority of sales,” Wener says.
“One of the main advantages to buying off-plan is that, in a steadily growing market, one benefits from the buy-now, pay-later principle where buyers pay a 10% deposit and the balance on transfer at completion — by which time the property would have already grown in value.”
But with the market in a negative phase, this benefit was lost, she says. With it went a significant proportion of the appetite for off plan purchases.
In addition, the introduction of the National Credit Act made it substantially more difficult for buyers to acquire finance for off plan purchases in particular.
Wener says the two factors removed the largest segment of off-plan buyers from the market, namely those purchasing as investors and speculators.
Further more, the softened prices of existing properties offered better value than a potential new build.
Faced with this drop-off in interest, many developers put projects on hold.
But the good news, says Wener, is that some of them are showing signs of interest in re-entering the market.
“There has been a definite shift in sentiment,” she says. “It is still early days, but we see signs of activity in this market again and are talking to several developers who are keen to get moving on new projects.”
Wener says some developers continued to operate through the recession to complete projects, taking the risk despite the reduced appetite among potential buyers and relying on sales to end-users once the project was complete.
“This has to some extent succeeded,” she says, “and will continue to do so as mortgage finance becomes more available. Thus we are seeing steady movement in completed developments, both in terms of sales from the developer and in respect of resales to end-users and investors.”
The trend has been noted at several finished or nearly finished developments that Pam Golding Properties (PGP) is marketing, such as The Quadrant and MontClare Place in Claremont, The Orangerie in Gardens and The Majestic Village in Kalk Bay.
PGP’s director for developments in the southern suburbs and south peninsula, Bev Bloch, reports seven sales at The Quadrant in the past six months — five of them since December — with a total value of R13m.
“The current phase is now fully complete and ready for occupation,” says Bloch, “and there is only one two-bedroom unit still available, plus a few penthouses. The next phase is due for completion in early March.”
Bloch also reports five sales at MontClare Place in the past six months — three last month — with a combined value of R9,63m.
A further four units, with a combined value of R19,108m, have been sold at The Majestic Village since October. One sale represents a record of R7,5m for an apartment in the area.
Development in the central city is also on the upswing. PGP’s area manager for the Cape Town city bowl and Atlantic seaboard, Basil Moraitis, says the company has several developments on the market in this area, including the newly launched “Six”, which has just been completed on the edge of the central city.
PGP is also marketing two developments along the western Seaboard. The first, Melkbosch Village, is in the quaint seaside town of Melkbosstrand, known as the gateway to the west coast. Closer to Cape Town lies Eden on the Bay, occupying one of the prime positions on Blouberg’s Big Bay beachfront.
