PROPERTY: PGP Reports Slow But Steady Growth
Recent Western Cape Business News
Despite ongoing reports of a somewhat stagnant property market, Pam Golding Properties’ Cape Town metropolitan area of the Western Cape continues to buck the trend. The company’s results for the financial year ending 28 February 2011 reflect slow but steady growth in residential property sales in the Cape Town metro area.
“This is coupled with our focus on improved service levels and an expanded agent workforce,” says PGP’s MD for the region, Laurie Wener. “In an area as geographically restricted as the Cape Town metro, in order to keep growing sales and expanding market share we are constantly honing business efficiencies – working ever smarter and better than our competitors. The past few years have been challenging ones for the property industry, but we believe that we have weathered the storm better than most due to our concentrated efforts in offering quality service and recruiting the best agents. The results speak for themselves – this region has seen a more than nine percent increase in unit sales (i.e. sales volumes) compared to the financial year ending February 2010, and a 13 percent increase in total sales value achieved over the same period. Although market recovery is gradual and is slower in some price brackets than others, we are seeing some degree of improvement across the board, which is an encouraging sign.”
Among the areas which have seen the most marked improvement is the sectional title market, where Wener says there was a significant pick-up in activity, particularly in the final quarter of the financial year. “This rising demand has been so significant that in some areas such as the City Bowl, the sectional title market currently exceeds the value of traditional full-title sales. These are mostly sales to South African end-users who are buying apartments to live in, many of them with 100 percent cash or very high levels of equity. The demand is across all price ranges, from entry level units priced under R1 million, to luxury top-end apartments priced from R15 million to R18 million. Buyers are recognising the appeal of a more compact, easy-to-manage lifestyle, where a number of the costs of living are incorporated in their purchase, such as security, maintenance and amenities like pools and gyms. Many of these sectional title homes are also located close to places of work, thereby significantly reducing owner’s transport needs – no small factor in the face of congested highways and rising fuel prices.” Wener adds that there has also been a conservative resurgence of investor interest in such units, mostly from buyers using their high levels of cash equity to negotiate favourable deals.
Another segment experiencing particularly high demand is the rental market, which has seen huge growth over the past financial year, particularly at the top end of the market. Wener says a number of factors have contributed to performance in this sector, including the increase in the number of businesses who are aspiring to relocate to Cape Town or set up additional offices in the city. “Our Central City in particular is proving very popular,” she says, “as it is now a clean, vibrant, business-friendly environment - and will only become more so as the city rolls out plans for further development of this hub. The recent unveiling of plans to expand the Cape Town International Convention Centre, as well as moves to establish a World Trade Centre in the city to promote international trade and networking are sure to increase the number of companies choosing to position themselves here in the future. The result is that businesspeople will be relocating here in increasing numbers – many of them seeking rental accommodation close to work, especially in their initial months in the city.”
Returning expatriates are another source of interest in the rental market, as many choose to rent in the initial period after their return home, while they assess job opportunities and decide on where they intend to settle permanently. “In general,” says Wener, “there is a desire for liquidity amid tough financial times, and this is leading some would-be buyers to opt to rent for the time being, until there has been a greater degree of economic recovery. The result is that even some top-end clients, who are financially secure and do not have issues obtaining finance, are choosing to rent rather than buy – and are prepared to pay high monthly rentals to secure a top-quality home.”
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