Buy land in heritage suburbs, investors advised
Mon 3rd March 2014
Lew Geffen Sotheby's International Realty
While buy-to-let property development in newly-built developments is slowly starting to pick up again, investors would also do well at the moment to focus on pre-owned homes with large gardens in the heritage suburbs of SA’s major cities.
So says Lew Geffen, chairman of Sotheby’s International Realty in SA, who notes that there are two factors currently working in concert that will significantly boost the value of such properties over the next few years.
“In the first place, the new spatial plans for our large cities lean heavily towards densification and better use of their land and resources to accommodate the rapid urbanization of SA’s population. And this predisposes city councils to the subdivision – albeit within limits – of the very large stands that were previously common in such affluent suburbs as Bryanston, Houghton, Melrose and Westcliff in Johannesburg, and the Southern Suburbs of Cape Town.
“This policy was underscored recently in the Medium-Term Budget Review presented to parliament by Finance Minister Pravin Gordhan, in which it was announced that SA’s eight large metros are to get more than R350m worth of additional funding over the next two years, specifically to address apartheid-legacy spatial planning issues and enable poorer families to live closer to city centres and work opportunities.”
Secondly, he says, steep increases in property rates and maintenance costs over the past few years, as well as security concerns, are prompting many wealthy homeowners to consider modern clusters or high-end sectional title homes as alternatives to the large houses they have traditionally favoured.
“Generally they are not, however, willing to compromise on their quality of life, property value or location in their search for more compact, more manageable properties. On the contrary, many appear willing to pay something of a premium to remain in the familiar surroundings of the more affluent suburbs, and therein lies a real opportunity for astute investors and developers.”
In fact, says Geffen, his advice to property investors right now is to buy as much land as they can in the best areas they can afford – almost irrespective of the condition of any buildings on the property – because substantial land parcels in sought after areas are set to become an increasingly rare commodity.
“Meanwhile those fortunate enough to already own large stands in the heritage suburbs areas should seriously investigate the possibility of subdividing them and developing them to accommodate three or four homes – one for their own use, perhaps, and the others for sale or to let.”