New developments add value
Property is always a sound investment, but during economically challenging times, buyers are looking for opportunities that present good value for money.
New developments have always been popular, says Laurie Wener, Pam Golding Properties executive of developments for the Cape Region. Buying off-plan means that, if bullish market conditions prevail, in the short term, capital growth will yield a profit from the date of purchase and the date of transfer with the least long term growth and hedge against inflation with very low risk.
A buyer is also able to save on transfer duty as development sales are inclusive of Vat and this inclusive price will be regarded by financial institutions as the purchase price. The buyer therefore does not have to fund transfer duty with cash. Furthermore, a cash deposit of just 10% will secure a purchase, with the balance payable up to three years later when construction is complete.
“The popularity of off-plan buying has certainly increased in the past 20 years, especially with buyers wanting a property that has not been lived in, and that can be designed according to modern needs and trends,” says Wener.
Despite the fact that we are experiencing a buyers’ market where prices have softened, there are still tremendous advantages to paying a little more for a brand new property. Apart from the attraction of modern design, new buildings offer the latest in digital security, fast bandwidth for residents and topnotch security systems.
Many include DSTV, air conditioning and home automation. Green features are usually standard, and include the economical use of grey water and hot water generation. Major maintenance is rarely required as new buildings carry contractors’ and subcontractors’ guarantees for some time after completion. And, if features such as elevators, swimming pools, gardens and roofs are well supervised and maintained, they will not require major refurbishment for many years.
Most importantly, recent amendments to the Sectional Title Act require the holding of a separate Reserve Fund for major maintenance, set at an amount equal to 30% of the gross annual levy. In older buildings, the financing of major maintenance as well as the obligation to have the Reserve Fund at the set amount has burdened owners with hefty special levies. With a new building, there is time to accumulate the Reserve Fund over a few years by including a little extra within the monthly levy.
Many of the new developments embody the live-work-play trend that is gaining traction around the world, says Wener. “People want secure, lock-up-and-go living which many of the apartments and townhouses in newer developments provide. As result, these properties are also sought after rental stock.”
Wener says there was unprecedented enthusiasm for apartments in 16 on Bree, when they came to market in 2016 due for completion around September 2020. Studio apartments start at R1.760 million Vat inclusive, and there are also one and two-bedroom units. Here, the generous allocation of secure parking with one bay per bedroom was a major attraction to potential purchasers regardless of whether they are owner occupiers or investors.
On site parking remains an critical element in the sale of all properties in Cape Town where most people own their own vehicles and personal security and convenience is a basic requirement.
Posted by Anel Lewis