Positive outlook for the Johannesburg development sector
Investors looking to buy property this year would do well to buy now into new off-plan developments to be completed in a year to two years’ time.
It is a great way to lock in the value now and ride a more positive outlook till completion, says Peet Strauss, development manager for Pam Golding Properties in Johannesburg.
“Savvy buyers would appreciate the value offering as prices are reasonable with plenty of good opportunities for those looking to buy into iconic developments for investment but equally to live in.”
Strauss says in 2017, many investors with money took a ‘wait-and-see-approach’ towards buying into new off-plan developments in Johannesburg partly because of slow economic growth, political uncertainty and a general negative sentiment.
“We remain positive that 2018 will see a lot more activity with many of those investors returning back to the market as well as see an increase in sales volumes.”
For buy-to-let investments (of those new apartments bought off-plan), rentals are expected to increase as sentiment improves. He explains that while rentals remained stable in 2017, a trend from corporate clients was to downscale on the size of apartments they rented. Where they would have rented a two bedroom or three bedroom apartment for example, they would rent a one bedroom apartment. This was due to a weak Rand that influenced remuneration packages to expats on contract in South Africa.
Strauss says purchasers who bought off-plan into some of their developments in Johannesburg are expecting returns of between 7.5% – 9.5%.
He notes that new investors who are young professionals are likely to start looking to rather invest and create wealth through property than to spend large sums of money into buying luxury cars for example. “This is a trend that needs to grow and be nurtured as it increases the investor pool into the market.”
Strauss says the real iconic developments they look after including Rosebank’s Park Central, Melrose Arch’s One on Whiteley and Bedfordview’s Infinite are currently under construction and completion dates now defined will stimulate sales. These all have similar completion dates which opens up opportunity for one or two new developments to be launched during 2018.
“We feel the timing is good and there is less built in the sector currently and so it makes sense to launch new developments,” he adds.
Source: African Design Magazine