KZN Sustainable Growth

27 July 2017, Thursday

Featured in the Luxe (Luxury Coastal Estate Living) magazine on 1 July 2017.

There is no doubt that this has been an exceptional period for gated estate developments within KwaZulu-Natal, with specific reference to Umhlanga and further North. This is emphasised by the fact that, in the last 12-months, from Umhlanga to Salt Rock R2.1 Billion in transfers were done within gated estates.

What is more significant is that this excludes the multitude of new development opportunities that have launched, but not yet transferred. This category includes the likes of Pearl Sky, Oceans Umhlanga, Umhlanga Arch and The Sibaya Precinct with developments such as Ocean Dune, Signature Sibaya and Pebble Beach. There are also the additional sales that have occurred within the new gated estates North of Ballito. The cumulative sales value of these projects, that haven’t yet transferred, would exceed R3,5 Billion.

This means that when one combines those that have transferred and those that haven’t, the total figure would exceed R5,8 billion for the last 12-months which is absolutely staggering for a relatively small geographic area. Had this all happened over extended periods then it may be easier to comprehend, but we have seen a consistent rollout of developments with values of close to R1 Billion.

Whilst new developments continue to be planned, and construction reaches a frenzy, the big question that most people will be asking is whether such demand within KwaZulu-Natal is sustainable and whether the massive rate of sales can continue.

Private Property recently featured an article on the 10 most expensive areas in South Africa. Three of these are situated within KwaZulu-Natal and within less than 40kms of each other, namely; Umhlanga, Umdloti and Ballito. The significance of this is that, outside of Cape Town (Atlantic Seaboard, City Bowl and Southern Suburbs), the area from Umhlanga to Ballito is the most valuable stretch of property in the country. It has also not just been inflated based on a surge of speculative investment, but the fundamentals are far more solid, and sustainable, in the sense that the demand is being stimulated by more people moving into the area and a healthy combination of strong demand and good product.

Some of the key reasons behind this statement are that firstly, Gauteng buyers are snapping up property in KwaZulu-Natal. Currently this market makes up approximately 15% of buyers within new development, but I predict this may grow up to 30% within the next five years. These are couples or families who are relocating for holistic lifestyle, value-for-money, security or retirement.

Secondly, nobody could argue that KwaZulu-Natal has some of the best developments in the country. We are blessed with some of the best developments in the country which often blend our great coastline, with climate, proximity to the airport, safety, affordability, indigenous forest and a great blend of nearby attractions.

This is combined with the fact that new land within precincts such as Sibaya and Umhlanga Ridgeside continue to be unlocked, along with new developments from Salt Rock through to Tinley Manor.

When one compares the appeal of these areas, to anywhere else in the country, it’s not hard to see why this will attract investors from all areas of KwaZulu-Natal, the rest of SA, as well as internationally.

Notably, people are moving North. Much of the demand is being stimulated by over 30 families a month moving into Umhlanga and the North Coast from affluent areas such as Durban North, Morningside and Berea, as well as Westville. This combined with the additional buyers from Gauteng makes for a significant level of new investment into the area.

The KwaZulu-Natal market understands investment. Durban, in particular, is blessed with a very strong culture of investors who understand the benefits of property investment and the substantial benefits that can be gained from getting in early and buying property off-plan. Investors have the added benefit of tools such as Airbnb which can substantially improve rental yields based on KwaZulu-Natal’s attraction as a holistic holiday destination.

In due course, KwaZulu-Natal is going to become SA’s retirement capital. People from around the country are catching onto the benefits of KwaZulu-Natal from a retirement lifestyle perspective. This will continue to attract investment from outside of KwaZulu-Natal. Whilst many, from areas such as Gauteng„ will choose from the great selection of new retirement developments that have come on-line of late, some will still choose to relocate to one of the existing lifestyle estates on the North Coast, and opt to holdout for healthcare.

Very few can accurately predict what the economy is going to do in the foreseeable future. What we can be certain of is that the area north of Durban will continue to be the best performing residential node in the country.

It would be naive to comment on an area outlook without taking into account the potential of interest rate hikes during the course of 2017. This certainly has the potential to be a ‘party-pooper’ but the reality is that even in challenging economic conditions, a good product will continue to be desirable especially when factors such as security and the demand for gated environments, applies.

“There is absolutely no doubt that the results will continue to be there, buyers, who get in early, will continue to see growth and KwaZulu-Natal will remain one of the most desirable property investment locations in the country.”

The pipeline is very strong and the one certainty is that more, carefully planned estates will be coming onto the market which will serve to further enhance the appeal and attract investment from outside of the immediate vicinity.

Stefan Botha strives to redefine the way property developments are marketed. Botha’s innovative approach to property marketing stems from a passion for property and a commitment to push the boundaries and create unique solutions.



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