The pro's and con's of moving into the city.
Purchasing property in the city centre provides us with the one thing we cannot buy...time. However, owning a property within the CBD does have its drawbacks. For this reason, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, recommends that buyers work through an experienced real estate practitioner who specialises in this kind of market and who can provide advice on the various pros and cons of owning property within the hustle and bustle of a town centre.
One such area specialist is Neil Viljoen of RE/MAX Living who operates in the Cape’s City Bowl and surrounds. Viljoen explains that the most notable perk of living closer to town is having a shorter daily commute. “Cape Town is renowned for traffic congestion. Being surrounded by mountains on one side and the Atlantic on the other, there are few solutions to this problem in an ever-expanding city. Living in the city not only buys you time (the average Capetonian living outside the city could spend as much as two hours a day commuting to work), but also the convenience of being within walking distance or a five minute Uber ride to almost any shop, office block, restaurant, park or outdoor activity you could imagine,” he explains.
Quite oppositely, the clear downside to living close to the city centre is cost. Entry level units in the Cape’s CBD start from R1,5 million and this will buy you a studio or one-bedroom unit. The more luxurious units (with amenities such as 24-hour security, mountain or bay views, and parking) typically start from R2,5 million upwards to around R10 million for top end penthouses.
“There is a constant demand for property within the CBD, from locals to foreign buyers looking to invest and ‘swallows’ hoping to chase summer across the globe throughout the year. The result is that you will pay approximately 30% more for a property in the CBD compared to a property in the outskirt suburbs,” says Viljoen.
“Of course, the upside of this is that buyers will benefit from a substantially higher rate of capital growth given the strong demand and limited supply. They also stand to gain higher investment yields on travellers looking for short-term letting options who are willing to pay a much higher rate to be city-based. This not only affects rate per night, but also increases occupancy rates. The combined effect is higher net yields,” he continues.
For those tempted to tap into this higher yielding market, Viljoen advises buyers to stick to the basics, purchasing easily managed sectional title properties in good developments with healthy body corporate financials. “So many buyers buy within sectional title developments without understanding the body corporate’s balance sheet, which can end up costing them later,” he warns.
He also cautions buyers to be wary of heritage properties. These might have great character, but they also tend to attract special levies because of their age and maintenance costs. “To avoid these stumbling blocks, I would recommend finding an agent who knows the area well and to allow that person to be your primary contact and represent you as a buyer’s agent. This way, you'll get solid, honest advice and he/she can do the homework for you without costing you a single cent.”
Lastly, Viljoen recommends that while it is good to shop around, it is not good to hesitate when you find something you like. “Following the latest market correction, now is a great time to buy and there is amazing value to be had. Astute investors believe the market has bottomed out and are back in full swing to buy for good value. If you find a property that meets your needs, do not hesitate to put pen to paper. If it is priced right, it will not be on the market for long as we approach peak season from now through to end April 2020,” he concludes.