Getting a foothold in the Atlantic seaboard market

The prestigious Atlantic seaboard is arguably the most desirable address in South Africa and home to the most expensive road in the country, with most people believing that property ownership on this exclusive coastline is a pipe dream.

Rows of lavish designer homes that cost tens of millions adorn the slopes of Lion’s Head and Signal Hill and hug the Cape’s best beaches, but is all property in the area out of reach and exactly what would you have to pay to get a foot in the market and turn the dream into reality?

“Opulent penthouses aside, the most affordable entry point is definitely the apartment market and the Atlantic seaboard still offers accessible investment opportunities if you know where to look,” says Brendan Miller, Atlantic seaboard chief executive for Lew Geffen Sotheby’s International Realty.

“Most affordable are the older apartments in the heart of Sea Point, lower Green Point and Three Anchor Bay which can still be bought for between R1.3 million and R2.3m, depending on size and condition.

“Although they may not overlook a pristine beach, these properties do offer excellent returns on investment as well as entry into one of SA’s most dynamic and stable property markets and an excellent rental income.”

Miller says the proximity of these suburbs to the fast-developing CBD and V&A Waterfront have a positive impact on the growth in property values in this area.

The house market in these suburbs also offer the most accessible entry level investment opportunities and an old house in its original condition priced at around R3.4m could be the reward for patience – and a little luck.

Agent Vivienne Gottlieb says: “At this price point, investors can expect to buy an unrenovated two-bedroom cottage, usually without parking. However, my advice for maximum return on investment in this area is to pay a little more for an old house on a larger stand with GR4 zoning.”

Gottlieb’s partner, Peter Simmons, says these properties are most commonly found between Main and High Level roads, but he says they are quickly being snapped up and investors who want to enter the market should do so as soon as possible.

For many years Mouille Point was the poor relation on the Atlantic seaboard with the property landscape comprising older apartment blocks that had seen better days but offered excellent value for money as well as sea views and convenient location. However, the face and property market have changed significantly in a few short years.

Miller says: “The construction of the Cape Town Stadium for the 2010 Soccer World Cup and the development of the Green Point Urban Park stimulated extensive residential development and regeneration in the area, which elevated Mouille Point’s status and substantially increased property values.

“These days, the entry level price is around R2.3m and, though sea views are often included, the only properties available at this price are studio apartments. However, the rental market is excellent, with lucrative short term rental units being especially in demand.

“In the V&A Marina development, when you can find these gems, prices start at R5m but for this price, investors are buying more than just a modern home in a prime location. The marina offers investors an opportunity to enjoy the peace of mind of an exclusive security estate and they have the lifestyle and amenities of the V&A Waterfront right on the doorstep.

“If you can stretch your budget to invest in the marina, the return on investment will be its own reward as the development continues to experience remarkable growth, with 2015 being one of the most successful in its history,” says Miller.

There is a far more limited apartment selection for buyers wanting to invest in the more tranquil, wind-free suburb of Fresnaye and, while studios or older one-bedroom flats priced at R1.2m to R1.5m do occasionally hit the market, entry level sectional title properties generally start at around R3m.

Says Miller: “Although several older houses on large plots in lower Fresnaye have made way for small and exclusive sectional title developments, freestanding properties still dominate the suburb.”

Agent Lara Kaplan says the growing demand for property in Fresnaye and the resultant stock shortages, especially in the lower price bands, have spurred a steady growth in property values.

“We have noted a 15 percent price increase of entry level houses in the last year alone, with prices now starting at around R7.5m. Houses at this price are usually older three-bedroom homes in need of more than a little renovation and occasionally a smaller, renovated two-bedroom house can also be found but these properties are now becoming scarce.”

Neighbouring Bantry Bay is where properties begin to hug the coastline, offering unsurpassed sea views while remaining protected from the fierce south-easter.

Fran Segal, Lew Geffen Sotheby’s International Realty agent in Fresnaye and Bantry Bay, says that another drawcard is that Bantry Bay offers buyers a range of investment choices, from older entry level properties in need of modernisation to opulent modern apartments perched above the crashing waves and luxury designer houses further up the hill.

According to Miller, you can still buy a quaint one-bedroom apartment in an older Bantry Bay block for around R2m or a modest original family home for under R5m, but these are becoming increasingly rare.

“Apartments in renovated blocks are becoming the new entry level point with starting prices of between R2.5m and R3m and houses are generally priced from R8.5m.”

Positioned snugly between Table Mountain and the Atlantic Ocean is the playground of the rich and famous; an exclusive enclave which is home to the most expensive road in SA and boasts the most expensive property a square metre.

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says the property market in Clifton operates independently of the general property market, and the cost of getting a foot in this exclusive market is a reflection of its distinctive appeal.

At the entry level are studio apartments which cost between R3m and R4.5m depending on position and condition and investors wanting to buy houses will be lucky to find one for R15m.

Camps Bay is one of the most dynamic markets on the Atlantic seaboard, spurred by Gauteng and overseas buyers who are increasingly drawn by its prime location, pristine beachfront and relaxed seaside lifestyle

Geffen says: “The suburb also has an advantage over its immediate neighbours in that most of the houses are set on sizeable stands and it also enjoy a dynamic rental market with long-term rentals and short-term lets across all market segments commanding some of the highest rental rates in the country.”

Camps Bay is also more accessible than one would expect given its idyllic location. R2m to R2.5m will buy a modern studio apartment or an older one-bedroom apartment.

Geffen says that overall, the Atlantic seaboard is very much at odds with the rest of SA in that the market is far less dependent on interest rate fluctuations. It is also one of the most stable residential markets in Cape Town.

However, he warns that anyone wanting to enter the market should do so as soon as possible, as the skyrocketing demand coupled with limited land for new development will continue to drive prices in the area.