3 Mar 23

Now is the time to strategically invest in property

We’ve got our eye on the property market and there are some exciting opportunities on the rise in growing locations across South Africa. As a nation, we are emerging to discover new economic opportunities for growth and, as they say, there is no better investment than property. With interest rates on an upward trajectory to pre-covid figures, now is the time to look closely at your property investment options and discover new developments that can offer attractive gross rental yields.

The rising interest rate is not all doom and gloom. In the past 2 years, the SARB dropped the interest rate to 7%, which has been positive for the property market, allowing a new generation of first-time buyers to invest in property at low, fixed, monthly bond rates. It has also allowed developers to continue with large scale projects that are part of even larger mixed-use precincts set to bring socio-economic change to South Africans.

From 7% in 2021, with gradual increments every few months, the interest rate has seen its latest hike on 22 July 2022 landing it at 9%, still 1% below the pre-covid figure. With these figures in mind, we are still within a favourable property investment period and combined with the drive for more lifestyle spaces, as a knock on from what we experienced during lockdown, developers are responding to the market demand, creating innovative estate-style opportunities within urban nodes.

Insider’s edge to booming locations

The KZN North Coast

From the 1980s, land along the KZN North Coast has been earmarked for development. Beginning with Umhlanga Ridgeside and expanding from Umhlanga village to Sibaya and further to Ballito, Salt Rock and Sheffield Beach. We have seen new, unique lifestyle developments coming up. Considering that from 2011 to 2022, the Umhlanga population grew by 212%, and that currently we are seeing the Greater Ballito population grow by 94% over the past 10 years, with an average 71 units transferred each month, there is currently a huge demand along the North Coast to live a new lifestyle in modern developments close to the ocean.

Whether through investment or for a lifestyle change, the KZN North Coast is expanding, connecting the urban nodes of Umhlanga and Ballito by the new developments beginning to emerge. Opportunities are abound in Sheffield Beach with apartment opportunities in the new residential development Sheffield Hills and bespoke luxury land opportunities within Elaleni. This location is within 5-minutes from Salt Rock Beach and easily connected to the N2. Both these opportunities have been brought to market by North Global Group, pioneering exclusive living on the KZN North Coast, working with renowned industry greats such as Lucas Uys, to conserve the natural forested areas and build homes within an evolving agricultural landscape.

Another popular precinct that will soon take off is North Point Ballito, brought to you by Cenprop. This precinct will be a large mixed-use development with recreational, commercial and residential nodes. Bliss Ballito, a residential development within North Point Ballito, recently launched this year with Phase 1 selling out in the first weekend and limited Phase 2 units still available for purchase, holistically Bliss is 70% sold out. Ballito’s sectional title capital appreciation since 2019 to July 2020 has been recorded at an average year-on-year 13.5%, with net annual yields for year 1 starting from 7%.

What earmarks a location for positive capital appreciation contains multiple factors. It takes into account residential and commercial growth, an increased population and innovation in services and opportunities. The more attractive the lifestyle that is presented, the more an asset appreciates in value.

Gauteng’s Rosebank and Sandton

In Sandton, 62% of sectional-title properties function as rentals, creating an opportune investor market. The buzz of professionals commuting to corporate offices in the vicinity has given developers an ideal to work towards: an urban oasis.

Look no further than HQ Sandton, positioned squarely on Africa’s richest square mile. This development is 12 floors, boasting South Africa’s largest rooftop garden with an impressive view of the Sandton skyline. In an area like this, you can expect an estimated capital appreciation on transfer up to 24%. Sandton is a nexus of exclusive retail, high-level think tanks and corporate powerhouses. There is nowhere else quite like it and it attracts the who’s who of the African continent.

Investing in HQ Sandton, with its attractive precinct design of public lawn areas, restaurants and concierge services has both long-term and short-term benefits for investors. You can expect an estimated annual gross long-term yield from 6% and estimated short-term gross annual yields from 14%. Accommodation in Sandton is always in high-demand and with HQ Sandton’s rental management solution, you can let their in-house service manage the influx of tenants for you.

A development turning heads in Gauteng is The Bolton, situated within Rosebank. Brought to you by Feenstra Group and Emira Property Fund, The Bolton is a 100% tenanted development that will be converting from a rental-only to a sectional title scheme. The conversion is an industry first, opening up the market in Rosebank to first-time investors with an affordable range of opportunities.

Rosebank is an established location in Gauteng with plenty to attract new investors. It is a booming location that has managed to retain its suburban charm within its 2km radius. In recent years, Rosebank has received a R7 billion capital injection to upgrade its urban infrastructure. This saw the addition of more friendly pedestrian pathways and public areas, including the addition of The Rosebank Gautrain Station and bus station. This area has seen an average 6% year-on-year capital appreciation on sectional title offerings.

As with urban development, corporate offices were first attracted to Rosebank’s leafy suburb which has attracted a growing professional workforce of young ambitious white collar workers. Rosebank has seen a 69% population increase from 2011 to 2022, with an estimated 61% of apartment properties rented out.

Affordable apartment accommodation in Rosebank is in high demand and land for new development is scarce. The Bolton has tailored facilities specifically for the rental market such as work pods, a cinema room, an onsite generator and water reserve tank. You can expect estimated gross annual yields on a studio apartment from 10.4%.

Look towards the future

The property market will continue to hold its own. In this buyer’s market, developments are coming to market at a rapid pace, eager to meet the market demand, offering incredible lifestyle facilities. Do your research and consider a long-term investment opportunity that meets the demands of now and the future.

South Africans are no longer in the market to purchase the same, generic property opportunities. As we transition from covid regulations, there is an urge to find unique homes that constitute a lifestyle change with facilities tailored to a new way of life. Now is the time to find your strategic property investment within the diverse portfolio of what South Africa has to offer.