Terry Swart, General Manager of Seeff, takes a look back over the property market in KZN in 2017, and gives an outlook on prospects for 2018.
The general sentiment in terms of the property market in the KZN region is that there is a softening from a demand point of view, given the general economic conditions. However, while our major bond partner Ooba reports an approximately 10% decline in the number of bonds granted over the past year, the value of the bonds granted has only decreased by approximately 4% in the same period. This points to a marginally more cautious market.
During 2017 the Seeff KZN group reported a 9% growth in sales over 2016, and this momentum is primarily driven by the availability of stock which is being provided by developers in the areas of Ballito, Umhlanga, Queensburgh and Hillcrest. Ballito is a fast-expanding area and the market overall is growing. Seeff Ballito posted a record month in October, with sales of over R53 million. In this area we have seen developments such as Zululami experience an exceptional sales pace at launch, and this pattern has been repeated in extensive developments by the Balwin Group.
The established market led by Zimbali Coastal Estate reports steady trade. It is forecast that in 2018 these recently launched developments will come on stream, together with additional developments such as Zimbali Lakes, to cope with increasing buyer demand. Average prices are expected to be between R3.5m and R4m. In the expanding market of the Dolphin coast lifestyle estates are now the preferred mode of living, priced at the over R3m mark.
This year the Umhlanga market was characterised by exploding development in the Sibaya area and central Umhlanga, where upper-end apartments and developments such as Pebble Beach have sold out. The recently launched freehold development Gold Coast Estate of just over 200 freehold sites is 80% sold out. It was also exciting to report achievement of a record price for a freehold piece of land in Homeford Drive of R11.675m. This development drive activity will continue momentum into 2018.
Richards Bay is also bucking the trend with acceptable growth. Prices of vacant land rose sharply at close to 80% year-on-year, while sectional title and freehold units showed growth of 3.65% and 10% respectively. The average price for a freehold property in Richards Bay increased to R1.15m in 2017, while the average price of sectional title properties increased to R710 000, so prices have increased even though sales levels have dropped. The Richards Bay Port and Industrial Development Zone hold much promise for the local economy.
Queensburgh is one of the more affordable suburbs, and this area will also see at least four new developments take off during 2018, priced between R850 000 and R1.8m – which is exactly where market demand is.
The Upper Highway area and Hillcrest in particular have seen extensive development recently in the market below R2m – which is the price point at which 75% of all sales in this area take place. Emberton Estate, set to include just over 500 units, has seen the first phase of approximately 140 units sell out, and there is increasing demand in the R1.3m - R1.7m price range. This has seen the final phase of Cotswold Downs Estate, called the Fenns, experience strong demand.
Availability of new developments under R5m has seen an increase in the rental market in the Upper Highway area alone of 50%, as many of the purchasers have been investors.
KZN is a market characterised by strong retirement village demand, evidenced by the Rob Roy Retirement Centre moving into phases 2 and 3 over the next 5 years, the expanding Kindlewood Retirement Estate in Umhlanga, and steady sales in the Hillcrest area where Le Domaine, with over 750 units, is now a landmark estate.
The Hammersdale area just outside Hillcrest has seen a blossoming of commercial activity, led by the over R1 bn Mr Price warehouse facility. Other corporate entities have followed this lead, which will have a positive effect on the outlying areas of Bothas Hill, Drummond and Monteseel.
When one looks at indicators of property movement, there is strong evidence of urban renewal on Florida Road and in the Durban CBD. Urban Lime, a company with extensive urban renewal experience in London and Cape Town, recently bought R1.1m worth of property in the CBD and Florida Road area for revamping.
In 2018 it is expected that the positive indicators mentioned above will see the KZN property market remain steady, with hotspots in Ballito, Umhlanga and Hillcrest.