Ultra-luxury residential market still hot property on auction
A designer five-storey villa boasting unsurpassed, endless ocean views on Cape Town’s Atlantic Seaboard is the latest in a series of unique super-luxury price band residential properties that have changed hands through an auction this year after long periods of stagnation on the traditional brokerage market.
The super-luxury residential real estate price band in South Africa is broadly defined as properties priced between R10 million and R50m.
High Street Auctions Lead Auctioneer and Director Joff van Reenen say an on-site auction was held last month at the Kruger Roos-designed villa in Llandudno, which was cited earlier this year as being the sixth most expensive residential suburb in South Africa with an average house price of R54 000m².
According to the New World Wealth “South African Wealth Report” for 2018, which analyses the average cost per square metre of residential property to determine the most expensive suburbs in the country, the top six are currently located on the Atlantic Seaboard.
They are, in order of ranking:
1. Clifton at R82 000m²;.
2. Bantry Bay at R76 000m²;
3. Fresnaye at R61 000m²;
4. Camps Bay at R56 000m²; and
5. Bakoven at R56 000m², followed by Llandudno.
Van Reenen says: “As happens with residential properties in this price band, they are marketed globally by High Street Auctions and the eventual buyer attends the auction as a bidder or watches the live stream and bids virtually.
“The bid to purchase the Llandudno villa at R16.655m was by a party who was at the auction on the day last month and it was accepted. The transfer is now in the works.”
The villa comprises five large en-suite bedrooms, all with panoramic sea views and luxurious living spaces, as well as a separate flatlet and triple garaging. All floors are accessed via two internal staircases and the house boasts a triple volume entrance. A private gymnasium, rim flow pool, and wine cellar/dining room are among the property’s many exceptional features.
Van Reenen says notwithstanding the Knight Frank 2018 Wealth Report released during the first quarter of the year that revealed Cape Town’s luxury real estate sector was the second-best performer globally between 2016 and 2017 at 19.9% (outperformed only by Guangzhou, China with growth of 27% over the same period) sales volumes and average prices achieved in this market segment had slowed considerably across South Africa under increasing national economic pressure.
“An FNB Property Metro Area Value Band report on Q1 and Q2 show that the two highest value bands continued to show slowing year-on-year growth, as well as being the two segments with the slowest year-on-year growth.
“According to the Barometer, the growth in the Upper Income Area value band slowed from 5.3% year-on-year in the Q1 to 4.9% in Q2, while the weakest segment, the Luxury Area Value Band, saw its growth slow from 4.7% year-on-year to 4.4%.
“One conclusion drawn in the report is that of the highest growth base a few years ago, the Luxury Area Value Band’s rate has slowed the most significant among the five value bands since around 2014, to reach the slowest rate of all the segments by the second quarter of 2018.
“It’s therefore not surprising that this year High Street Auctions has been fielding queries from a growing number of would-be sellers of unique super-luxury properties, whose homes have been languishing on the market for months or longer, with requests for assistance in divesting of their assets.
“The residential properties that work best on premium auctions such as those conducted by High Street, are always the properties with something different, a unique element to catch the attention of buyers.
“Our marketing is global and we have an exceptional track record of attracting buyers from all over the world. With auctions, we’re also able to achieve in minutes what many frustrated sellers have tried for months or even years to go through traditional channels, ultimately with little success.”
Van Reenen says another example of a property that languished for some time before it was sold through the auction house this year, was a sprawling luxury estate in Monterey Drive, Constantia.
“High Street found a buyer for that estate at a sale price of R24.075m. By going through a reputable premier auction house the sellers were quickly able to put the aggravation and stress of having a house on the market for an extended period behind them and needless to say the buyer is happy too, not least of all because it was a sound investment at a market-related price. All purchases at auction are either pre-approved or cash.”
International buyers are still very much a feature in the super-luxury residential market, Van Reenen confirms.
“While there are no degrees of ‘unique’, arguably the most unusual residential property we’ve been asked to sell this year was Pezula Castle at Noetzie on the Garden Route.
“That owner had been struggling through traditional channels for several years to find a buyer for a one-of-a-kind property; three mini ‘castles’ right on the beach that collectively comprised a magnificent boutique hotel.
“High Street auctioned the property in the first half of the year and it was purchased on the day by a European buyer for R29.483m.”
Van Reenen says with this segment of the residential property market currently showing such sluggish performance, sellers would be wise to consider putting their homes on auction.
“It’s really a no-brainer. With advice from experts such as High Street’s executives’ sellers can peg their properties at the correct reserve price for the area and current conditions and let the market have its say on the day.
“In the unlikely event that a buyer doesn’t emerge at the asking price there’s no harm, no foul; the seller hasn’t lost anything. It is far more likely, however, that the home will be auctioned quickly and painlessly at a price that suits both buyers and sellers.
“Since prices are determined by market demand whether the economy is sluggish or booming, a super-luxury residential property will sell at auction and it’ll sell at the correct price.”
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