Century City, where the demand for apartments remains strong.
DF Properties, a residential property marketing company that focuses on Century City, has doubled its turnover in the first nine months of this year – and owner, Dante Fratti says he will be delighted if things continue as they are.
“Demand for Century City property remains strong. This is understandable because the precinct offers a safe and convenient urban lifestyle only 10 km from the Cape Town CBD and because retail prices are way below those of new stock coming onto the market, even when that is sold (as it usually is) without transfer fees.
“Recently sold homes cost between R11 000 and R17 500/m2. In many cases the resales have cost buyers less than if they had to buy off plan.”
Fratti says demand for residential property at Century City never really dropped off, with the result that prices throughout the 2008/2009 slump held steady, even though they did not rise.
“The difference between now and previous years is that today about 85 percent of our enquiries are from potential owner-buyers, whereas previously buy-to-rent investors were thick on the ground. The big call today is for apartments priced below R1 million. There are a few of these, but not many. Most of our sales are in the R750 000 to R2m bracket, the average price being around R1.35m.”
He says the drop-off in buy-to-rent investors appears to have come about as a result of the current lacklustre economy rather than any statistics coming out of Century City.
“Rental returns for apartments here have remained extremely good. Take, for example, a two-bedroom unit selling in Villa Italia for R950 000. This will probably have a tenant paying around R6 000 a month. There will be a monthly levy charge, but that will include the insurance, the water, all external maintenance and the security. The investor’s net return will be around 5 percent from day one and, it is worth noting that rents are still rising, not at the 10 percent to 12 percent in previous years but certainly between 6 percent and 8 percent – which is still ahead of the inflation rate.”
Another factor very much in Century City’s favour, says Fratti, is that it is seen by the banks as one of the more stable and secure investment areas – and this makes getting a bond in the post-National Credit Act era easier than in most other areas.
“This will surprise many agents elsewhere,” says Fratti, “as I know that some of them are experiencing 45 percent to 55 percent rejection rates, but this year DF Properties has had only one bond application rejection. It is clear that the banks see this as a very sound place in which to invest.”
Fratti says that the capital growth of Century City units are still minimal (in real terms probably below 2 percent a year), but he believes the high standard of facilities and the excellent security will ensure that this area benefits most from the eventual upswing, which he expects to gain pace from the third quarter of 2012.
