News

Over-supply slows down Sandton’s sectional title market

Private Property South Africa
Private Property Reporter |
Over-supply slows down Sandton’s sectional title market

Sandton’s once-buoyant sectional title market is being subdued by over-supply as ongoing development outpaces demand.

According to Robin von Mayer, Sandton and Morningside Sectional Title Specialist for Lew Geffen Sotheby’s International Realty, Sandton’s status as South Africa’s financial hub has cushioned the sectional title market. While the demand for residential property remains consistent amidst tough economic conditions, there is a weaker buyer sentiment. However, properties priced correctly and offering great value, tend to find buyers.

It’s a buyers’ market across the board in Sandton, as supply outstrips demand. According to von Mayer, the most common outcome of a saturated market is for the affordable value-orientated sector of the market to become the most consistently active, and this is what is happening in Sandton. This outcome happens due to the market saturation, as well as the variety of buyers that would be interested in such a property. These include first timer buyers, investors, empty-nesters and those relocating.

What’s hot?

“Especially sought-after at the moment are family homes such as townhouses or cluster units in the R2.5 million to R3.5m price band as well as one bedroom apartments for around R1m that generally offer investors better returns than their larger counterparts.”

These properties are popular with property investors, as they are able to fetch a good rental yield, and are more in demand than other types of property.

Commuting woes

Commuters are getting tired of the rat race and many buyers are choosing to move closer to their work place. As Sandton grows commercially, there’s an influx of buyers who work in Sandton and would prefer to live there, rather than commute.

As much as the middle and upper markets have slowed, Sandton and Morningside still attract investors.

Von Mayer says: “High-end apartments in Sandton still carry prestige, especially in the new luxury developments, and these are predominantly purchased 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.   “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.”

Out of the city

The sectional title market outside of the city, according to von Mayer, is much more competitive. Things like off-plan options and a broader market for resale make areas like Fourways, Douglasdale and Rivonia increasingly popular for buyers in the security title market.

“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, aimed towards a different market segment and this has shrunk considerably over the past year”, says von Mayer.

However, according to Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, “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 and new investors should be prudent in their property selection and regard any purchases made now as long term investments rather than short-term flips.”

While the sectional title market may have subdued the property market temporarily, there are a lot of large-scale office developments in Sandton which continue to attract new corporates and this benefits the residential market for the future.

Take a spectacular journey through Sandton here:

Explore neighbourhoods mentioned in this article

Sandton
Work hard, play hard...then relax
Sandton is a vibrant, modern neighbourhood that contains the richest square mile in Africa. It is the business gateway into Africa for many large corporations and attracts thousands of ambitious people seeking their fortunes. But Sandton is not just about big business, residents find plenty of time for leisure too. World class shopping centres, and a buzzing social scene are a huge hit with the young and young at heart. Perhaps surprisingly, there is a huge amount of green space in the area that residents take advantage of to exercise or just take a breather.

Related Articles

Massive demand for estate living in Hout Bay
Press | 11 Jun 2019

Massive demand for estate living in Hout Bay

Unlike most areas where development has slowed considerably during the past two years, it has been full steam ahead in Hout Bay.

Cape Town CBD residential market boom
Press | 27 Oct 2015

Cape Town CBD residential market boom

2014 was a record year for residential sales in Cape Town’s CBD, with properties to the value of R856 million changing hands.

Sectional titles are taking over in Cape Town
Press | 29 Jan 2019

Sectional titles are taking over in Cape Town

Why sectional title homes are dominating the Cape Town property market.

sample image of property alerts

Get instant property alerts

Be the first to see property alerts for your area.
;