Cape Town’s southern suburbs are the most popular areas for apartment sales and rentals according to the Seeff Property Group.
Which market activity has been recorded?
Propstats data shows that there is almost one apartment sale per day across the area with a total of 355 sold in the 2022-year, only slightly below the 363 sales concluded in 2021. The average selling price for 2022 stands at around R1.883 million, notably higher compared to the R1.6 million average of 2021.
This is potentially due to higher-priced sales concluded last year. About 50% of all sales were concluded below the R1.5 million price mark and about 5% above R3 million. These top end properties would be mostly new builds offering luxury lifestyles.
According to Stephan Cross, the rise of apartment living is one of the hottest trends, not only in Cape Town, but also in areas such as Sandton. Urbanisation, rising traffic, limitations on time and the need for more secure living, are all factors which are prompting people to look for more convenient living spaces. Maintenance time and costs are also a factor which make apartments more attractive.
He says apartment complexes are also usually managed which means that owners and residents do not have to worry about aspects such as the normal functioning of security and general maintenance as these are taken care of.
A focus on ensuring the complexes are well maintained and well-run, both in terms of maintenance, but also financially, further adds to the attraction and investment value that apartments offer to buy-to-let investors.
A more compact lifestyle offered by apartment living unlocks more time and adds quality to your lifestyle. Hence, its noticeable that apartments no longer only appeal to certain categories of buyers or renters, but have a broad appeal, from young professionals, to families and older buyers looking to scale down.
Apartments are also the most sought-after property for rentals, especially those located in high-demand nodes with access to suitable amenities. These properties are therefore generally excellent buy-to-let investments given that there is an almost perennial demand for rental accommodation, especially in areas such as the Cape Town Southern Suburbs.
A new development such as Alphen Glen for example offers outstanding investment potential with above average rental returns projected based on actual rentals achieved. These offer rental yields of 6.8% to 9% on a one-bedroomed unit and this could potentially increase further over a 6-year period, he says further.
Using the example of a standard one-bedroomed unit with one bathroom and a parking bay and around 47sqm, which, depending on the units is priced between R1,595,000 and R1,925,000 (with no transfer duty payable) could yield a monthly rental of R11,000 to R12,000.
At a projected rental escalation of 8% per annual over the next 6 years, the investor could see a rental yield of 7.9% in year 1, 8.87% in year 2, 9.61% in year 3, 10.39% in year 4, 11.22% in year 5 and in year 6 the yield could reach 12.12%.
At the same time, the investment value of the property would have increased. New developments generally see stronger price growth because you pay the off-plan price compared to what buyers will pay once the apartments start reselling.
Writer: Gina Meintjes
