A spate of media coverage on the Cape Town Atlantic Seaboard suburb of Camps Bay and several articles on the affluent avant garde designs that architects have brought to residential properties in this area have, quite justifiably, created the impression that this is one of the most admired residential precincts in the Western Cape.
However, says Gary Freeman, Sales Manager at the Rawson Property Group’s Sea Point franchise, it is also true that, possibly to a greater degree than anywhere else in Cape Town, potential Camps Bay home sellers cling to outmoded and unrealistic valuations on their homes as if there never had been a 2009/2010 downturn, and as if Camps Bay’s prices have somehow the bucked the trend seen elsewhere along the Atlantic Seaboard.
Asked to give an example of what he considers overpricing, Freeman was asked to value one Camps Bay home and, after carrying out a comparative market analysis, arrived at a figure of R9 million to R9,5 million. The seller, however, insisted that he would not accept below R10,5 million. When the property was taken to the auction, the top bid received was in fact R9 million – which the owner declined to accept.
Freeman estimated that there are at least 60 or 70 homes for sale at Camps Bay and a fair number of these have been on the market for a considerable period. Many of these, he added, were second homes, the market for which has dropped since the downturn.
The price range for the Camps Bay area in which most of his clients are interested in buying, said Freeman, is in the R9 million to R15 million bracket. Even in this range, sellers consistently overvalue their property by R1 million to R2,5 million often based on their own market research in their area. Sellers often assume that the asking price is the correct valuation when assessing other properties in their vicinity. Higher up the price scale, he said, the overpricing can be even more excessive – but there are still many homes in Camps Bay, especially in the sectional title sector, at more affordable prices, e.g. a 32 m2 one bedroom studio apartment at R1,5 million and a larger 99 m2 apartment at R2,5 million.
Consulting Deeds Office figures compiled by Lightstone for sales this year, reveals that there have been several sales in the R4 million to R7 million bracket and the average value of freehold homes sold this year is, according to Lightstone’s figures, R9,347,000.
Only 26 freehold sales and 25 sectional sales have gone through at Camps Bay so far this year, but rentals have flourished and have escalated on an annualised basis of at least 5%.
“Almost any home in Camps Bay today,” said Freeman, “if rented for a year or six months will bring in a rental of R15,000 to R35,000 per month. If the owner opts (as many do) for a short term holiday rental he may well find himself able to charge anywhere between R1,500 to R4,000 per day depending on the location, size, and the facilities offered – and some of the top bracket units have been getting up to R15,000 per day.”
These figures, said Freeman, have not gone unnoticed by the buy-to-let fraternity who today are responsible for perhaps 15% of all Camps Bay’s buys.
As an addendum to his comments, Freeman said that the quality of Camps Bay as a residential precinct will ensure that it is unlikely ever again to lose value, but, he warned, those contemplating buying here should not only get in now but should visit the potential purchase on a day when a strong southeaster is blowing.
“It is quite extraordinary,” he said, “how these summer winds will hit certain areas and leave others barely affected. The winds have their routes and patterns and it pays to get to know these.”
Issued by The Rawson Property Group.