Insights

Estate homes a more secure investment in current subdued market

There is a growing preference for estate living in South Africa, as homeowners look for properties that offer both superior security and better investment opportunities. But these are not the only factors behind the growing demand for estate homes. According to Lightstone, the inclusion of lifestyle elements into estates – catering for activities such as golfing, horse riding and fishing – is bolstering the appeal of the estate lifestyle. Furthermore, the inclusion of hospitals, schools and retail outlets ensures that those purchasing properties within an estate receive the maximum value for their investment.

Lightstone estimates that there are currently approximately 6 500 closed communities and estate properties in South Africa. Over 50% of these estate properties are located in Gauteng, with a further 25% in the Western Cape.

A breakdown of estate property values reveals that 9.9% of properties located within estates are worth over R3 million in value, while a full two thirds are valued at more than R1 million. In comparison, it is estimated that in the national residential property market only 3% of homes are valued at over R3 million, while less than a quarter of all homes are valued at above R1 million.

Estates currently account for 5.1% of total housing units nationwide, yet hold 15.1% of the total property market value. This is attributable to the fact that the average price of an estate home is R2 million, almost three times the national average of R0.7 million.

The total value of housing stock in estates is now close to the value of all residential properties within the City of Johannesburg.

“Purchasing properties within an estate receive the maximum value for their investment”

A list of the ten most expensive estates across South Africa, reveals that the majority can be found in Johannesburg – with five located in Sandton and one in Houghton. The remaining four are located in the Western Cape. The most expensive estate is Villa Santini in Sandhurst, with a median property value of R17.4m, followed by Silverhurst Estate in Cape Town with a median property price of R16.25m. The entire top ten most expensive estates are classified as low density estates.

In terms of the estates with the largest number of active properties, seven of the top ten estates are located in Gauteng – primarily around Centurion and Pretoria. The largest estate is Mooikloof Ridge estate in Pretoria, with a total of 2 448 units, most of which are sectional title properties. Of the remaining three estates in the top ten, two are in the Western Cape and just one in KwaZulu-Natal.

A list of ten estates with the highest number of transactions during the past five years reveals that nine are to be found in the Gauteng region – predominantly in Centurion and Pretoria. Burgundy Estate in Cape Town is the only non-Gauteng estate to be included in the top ten.

 “The total value of housing stock in estates is now close to the value of all residential properties within the City of Johannesburg.”

As the South African economy enters its fifth consecutive year of subdued growth, activity in the local residential property market remains relatively muted. However, the estate property market has experienced increasing market activity in recent years, showing strong growth in both the volume and value of estate sales.

According to Lightstone, even though luxury-market buyers are currently under pressure, the estate-housing market is generally less volatile than the rest of the luxury market and is likely to outperform the luxury market during the current downturn.

View our Secure/Gated Living Properties in South Africa

 

Posted by Rikus Geldenhuys