High demand for quality homes in Gauteng
While South Africa’s economic growth prospects deteriorated through 2014 and is only expected to improve moderately in 2015, much of the Gauteng province is developing at a lightning pace that seems to defy the current economic trajectory.
So says Peet Strauss, head of the Pam Golding Properties Development Division, who admits he is often surprised to see how rapidly Johannesburg and Tshwane are expanding. “It is difficult to even conceive how an area such as Sandton has grown since the 1970s,” he adds. “Now we also have a number of other new growth nodes such as Rosebank, Hyde Park, Fourways, Midrand and Menlyn, to name but a few, mushrooming up across the province,” he observes.
“There are a number of reasons for all of this development,” adds Strauss. “It has certainly been spurred on by the considerable investment made by local governments in infrastructure projects such as Gautrain. It has, however, also been due to result of investment made by the private sector in countless retail, commercial and residential projects across the province. As a result, Gauteng’s new centres are growing into healthy and dynamic mixed economies, which is tremendously exciting.”
According to Strauss, it is in this climate that the ‘sleeping giant’ of the residential development market is ‘awakening’. “Many residential property developers were understandably cautious after the economy slumped in 2008. Some of the smaller developers fell by the wayside while others invested in projects from which they could extract rental value, he says. Over the last few years, there has been renewed interest in the market and a range of residential developments have been constructed. These have included smaller- to medium-scale developments of 10 to 150 units, as well as number of huge multi-million rand residential projects.
“Residential property investors have noted the strong demand for quality accommodation in the growth areas of Gauteng,” adds Strauss. “As a result, a host of upmarket residential developments and re-developments are springing up. Park Central in Rosebank, Steyn City in the Fourways area, The Regency in Pretoria, Melrose Arch and Eagle Canyon in Roodepoort, are but a few examples of these,” notes Strauss.
He says that the fact that developers are looking for opportunities in this market shows that they have tremendous confidence not only in the local economy, but also in the residential property market itself. Indeed, developers such as Redefine Properties, who have traditionally only occupied the retail and office spaces, are now looking to the residential property market as a way to diversify and strengthen their portfolios.
“Developers have noted that there is not only a need for accommodation within Gauteng’s growth nodes, but also a demand for properties that offer a quality lifestyle, adds Strauss. “It is gratifying to see that so many are finding innovative ways to meet these needs. ”
The demand for high-end development properties is being driven by a number of factors, not least of which is the fact that there are a growing number of wealthy South Africans who are seeking the upmarket lifestyle offered by some of the new residential developments. In Gauteng, wealthy foreign buyers, many of whom are from other African countries, are also fuelling the demand for these homes. Some of these buyers are seeking a local base but a number are also purchasing property as an investment.
“Pam Golding Properties has noted that people in Gauteng are looking to live closer to their places of work so that they do not have to travel for long periods every day,” suggests Strauss. “They are opting rather for expediency, which means looking for homes situated closer to their workplace, schools, retail outlets or transport routes. They want to live a good life that is balanced between work, family and play; a more holistic lifestyle if you will.”
According to Strauss, one result of this trend has been the emergence of a number of exciting new lifestyle concept developments within Gauteng. Park Central, a high-rise residential luxury apartment block being developed by Redefine Properties on the corner of Baker Street and Keyes Avenue in Rosebank, is a case in point.
“With sky gardens, manicured parks, roof gardens, and easy access to a host of facilities, Park Central will offer residents a total living experience. The building is being constructed in the heart of booming Rosebank and will form part of a specially created urban precinct, with a vision to include pedestrian links via the parks to the Gautrain Station through to the Rosebank Mall. The developers are attaining the seemingly impossible balance between a green and colourful urban lifestyle.”
According to Trish Luthuli, at Pam Golding Properties Gauteng, an entirely different development concept is the multi-billion rand Steyn City Lifestyle Resort, which is situated north of Fourways in Johannesburg. The 2 000-acre project is the largest development of its kind in Africa and once completed will be a completely mixed-use lifestyle resort offering a range of recreational facilities and consisting of an office development, a retail development, schools and crèches, as well as a hospital and healthcare facilities.
Steyn City’s residential units will ultimately consist of approximately 8 300 apartments and sectional title homes, 730 cluster homes, nearly 820 freehold homes and 120 retirement village units over the next number of years, but demand will dictate the final breakdown of property types. With its wide open spaces and boulevards, running and cycle tracks, skate park, outdoor gym areas and golf course, the resort will allow residents to enjoy a range of leisure activities and an incomparable quality of life.
“Pam Golding Properties forms partnerships with developers who possess integrity and experience and have achieved positive results. In some cases we become involved with developers in the planning phases of residential developments and are able to provide invaluable advice on current residential trends and tastes.”
“We market units not only during the off-plan phase but also once the buildings are completed and the development becomes more established. This ensures ongoing sales within these developments. An excellent return can also be made from rentals,” advises Strauss.
Speaking of the future of the residential development market, Strauss said that by all indications the current boom would continue for some time.
“While South Africa’s growth prospects deteriorated in 2014, the residential property market as a whole remained resilient and outperformed the economy, which augers well for the development market. Pam Golding Properties’ own experience shows year-on-year sales turnover is up by more than 23% and unit volumes are up by more than 11%. In addition the rentals market remains robust, buoyed in some areas by demand from local and foreign companies.”
“Not surprisingly, the banks remain reluctant to extend credit to developments that pose any risk, but developers with proven track records and enough equity and sales to cover their exposure are able to secure assistance. Buyers then stand to take advantage of this potentially highly lucrative investment option,” concludes Strauss.