The luxury housing market has been hit the hardest by the current state of the South African economy. But, while most luxury markets have seen a dip in activity, others, such as Thesen Islands in Knysna, continue to thrive despite the economic downturn.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, national market conditions are still slow, but certain hubs continue to do well. “This reality is reflected in our sales total for July which amounted to nearly R1.9 billion – an incredibly difficult number to reach if you are operating in a slow real estate market. Our vast footprint across the region is what enables us to reach this amount, as the demand within certain suburbs continues to exist despite the challenging market conditions,” Goslett explains.
One such hotspot to which Goslett alludes is Thesen Islands in Knysna. Since space is limited and demand is high in this area, properties on these man-made islands offer great investment potential for luxury buyers. According to Sue Abernethy, Sales Associate at RE/MAX Coastal, Thesen Islands has shown exceptional growth in prices since its inception – even during the economic meltdown, the prices were the least affected in the surrounding area.
“There are 512 individual homes and 56 apartments on these islands, with a 2-bed apartment starting at around R3 million. At the moment, there are only about three sectional titles on the market: a one-bedroom for R4.2 million and another three-bedroom for R5.2 million. Freestanding homes start at around R5 - R6 million and vary from three bedrooms up to five bedrooms. Most of the larger properties in the higher price bracket are on the water and have their own private jetties. Because we are very short of stock, sellers are able to sell at a premium price owing to the demand,” says Abernethy.
For the true luxury buyer, the upper level starts at around R13 million, with a private Island on the market for R24 million. “One particularly well-priced property is currently on the market for just under R16 million, boasting three bedrooms, all with ensuite bathrooms, and belonging to the designer and developer of Thesen Islands himself who was able to choose probably one of the best sites on the Island, so you know that this is a prime investment,” Abernethy suggests.
According to Abernethy, there is also an extremely active rental market. “There is currently a shortage of stock, especially for holiday rentals. We simply can’t keep up with the demand for properties! A small house will cost about between R20,000 to R25,000 per month, but short-term holiday rentals yield much higher returns and attract some of the highest day rates in Knysna’s upmarket rental market.”
In terms of the buyer profile, Abernethy explains that the market has turned to South African investors. “We used to have many overseas buyers, but these days the area seems to attract many families who have bought here for the lifestyle and security. With the airport in George being close by, the main income provider usually commutes to Johannesburg, Cape Town or Durban. We do also have many retired couples here, as well many holiday homeowners. I think approximately 30% of residents are permanent and the rest are holiday homes,” Abernethy describes.
The area offers a laid-back holiday lifestyle that is safe and secure, which explains why holiday makers, retirees, and permanent residents alike flock to claim a piece of this coastal luxury.