Sandtons property market shifting to favour buyers

Sandton’s status as South Africa’s financial hub has, to a large extent, cushioned the suburb’s sectional title market, with demand for residential property remaining consistent despite the economic slump and weaker buyer sentiment. 

Situated in Morningside, Sandton, this townhouse offers three bedrooms, two bathrooms, open-plan living, fitted kitchen, private garden, security features, and access to tennis court and swimming pool. It is on the market for R2.55 million - click here to view.

But the once-buoyant sector is being subdued by over-supply as ongoing development outpaces demand. This is according to Robin von Mayer, Sandton and Morningside Sectional Title Specialist for Lew Geffen Sotheby’s International Realty, who says over-supply has led to a buyer’s market across the suburbs. 

"That said, properties offering great value at accessible prices will always find ready buyers, albeit at a slower pace," he says. 

According to Von Mayer, the more affordable, value-orientated sector of the market at a lower rand per square metre has proved to be the most consistently active, which is a common response in a competitive and saturated market. It also benefits from a wider buyer base that includes first-time buyers, empty-nesters, investors and those seeking relocation.

He says especially sought-after at the moment are family homes such as townhouses or cluster units in the R2.5 million to R3.5 million price band, as well as one bedroom apartments for around R1 million that generally offer investors better returns than their larger counterparts. 

Von Mayer says the latter are especially popular with investment buyers, who can expect a healthy rental return of R8 000 per month on an apartment that costs R900 000.

He says with the growth of the commercial market in Sandton, the continued influx of people seeking accommodation closer to work has been a big positive for these market sectors. 

The middle- and upper-market segments may have slowed and their buyer base has narrowed in Sandton and Morningside, but they are still attracting investors. 

This Bryanston townhouse has two bedrooms, two bathrooms, open-plan living areas, fitted kitchen and security features. It is priced at R2.15 million - click here to view.

“We have seen a steady increase in Indian and Chinese investors in the middle market, many of whom come to South Africa on fixed-term contracts, and believe it is a better option to buy rather than rent as they can either sell at a profit or rent out the properties once their contracts have expired.” 

According to Von Mayer, high-end apartments in Sandton still carry prestige, especially in the new luxury developments, and these are predominantly bought by affluent investors who have business interests in the area. 

"Sandton and Morningside may carry the location status, but many of the surrounding suburbs offer more property for the same amount of money, and landlords and investors need to acknowledge this and act accordingly," he says. 

“This is especially true for two bedroom units, where demand has dropped significantly, partly due to the fact that the corporate market has taken a knock, with many companies decreasing accommodation budgets.” 

Von Mayer says the sectional title market is generally more competitive in areas further from the CBD due to factors like affordable off-plan options and a broader target market that offers more resale options. As a result, he says suburbs like Fourways, Douglasdale and Rivoniacontinue to enjoy healthy demand, especially in tougher economic climates. 

"In areas closer to the Sandton CBD like Illovo, Sandhurst, Morningside, Sandown and Strathavon, the sectional title off-plan developments are less affordable and more prestigious, and are aimed towards a different market segment ,and this has shrunk considerably over the past year," he says. 

This Fourways duplex offers three bedrooms, two-and-a-half bathrooms, open-plan living with fireplace, newly renovated kitchen, garden and double garage. It is selling for R2.1 million - click here to view.

Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says although the market will continue to take pressure for some time, owners shouldn’t panic. 

He says Sandton will always enjoy a high demand for residential property, and it must be borne in mind that a correction process is often better for the overall health of the market. 

“In times like these, it is always better to sit tight and ride the storm. New investors should be prudent in their property selection and regard any purchases made now as long-term investments rather than short-term flips.” 

Geffen says while the ongoing sectional title development may have temporarily subdued the market, the investor confidence bodes well for the area. Large-scale office developments in Sandton, which continue to attract new corporates to the node, will benefit the residential market in the long term.