Bugle Sales Talk Editorial

Although recent vacant land pricing does appear to have outrun the market, the limited stock of approximately only 20 sites available with pricing ranging from R1,450,000 to R6,500,000, is a reason as to why sellers will remain in the driving seat given a strong undercurrent of demand. End-users will however have to replace developers or speculators as the high entry level of vacant land makes it particularly difficult to deliver competitive pricing on finished homes. Simbithi by numbers stacks up as follows:

Currently we have 593 completed sectional title units across 8 sectional schemes and 483 completed freehold homes. This total of 1,076 completed homes represents 57.39% of the total 1,875 residences of the overall capacity provided for in the master plan. This provides a sense that a significant amount of building is still in the pipeline for Simbithi over the next few years. What some folks may not realize is that there is no build by date in Simbithi while the vacant land remains untouched, but only once building has actually commenced on site.

This was a smart move early on by the master developers not to try and create a rule that could potentially be impossible to enforce and was not an effective measure in ensuring that an estate becomes developed. Basic economics causes an estate to develop relatively quickly rather that a rule found within its constitution. Currently in Simbithi there are two sectional schemes under construction that will add another 50 units and a further 93 freehold homes under construction. Within the near future the completed residences will therefore exceed 1,200. Simbithi's Estate Levy at R1,700 p.m. is relatively low, as is the levy stabilisation fund contribution of R12,000 (a once off payment made by the purchaser in every transaction). When we consider the age demographic of all transactions within Simbithi over the past 12 months, we note that the 36-49 year old bracket is the dominant category with 45% of recent buyers and sellers falling within this age bracket.

For recent buyers in the older bracket we find 26% between 50-64 years old and 8% over 65. For the sellers we find that 12% are over 65 and 36% are between 50-64. This can be expected as older folks sell and move out to opportunities elsewhere more suited to a retirement lifestyle while people in their 50's and early 60's are replacing these sellers. Interestingly no buyers or sellers within the 18-35 year old bracket appear. This could also indicate that Simbithi pricing has largely outrun this age bracket who will now be finding better value in alternate destinations such as Dunkirk or Palm Lakes. The average price for Simbithi property across all transactions is currently R4,250,000. Whereas freehold homes can vary significantly in price from one to another, within the sectional title sales we find that properties will trade within a narrower price brand with the price per square metre achieved being a good yardstick to value other similar units.

If we consider all sectional title sales within Simbithi since 1st January 2012, eliminating a few outliers like the two transactions relating to the sale of the country club property, or a series of very low transactions, which could relate to distressed sales, we come up with 264 transfers ranging in price from R690,000 to R4,875,000. Pricing per square metre has averaged R10,598 over this period. The recent high of R22,644 has been achieved, but not on a residential unit. The highest rates have been paid for offices in the new Simbithi Office Park. This is interesting that the commercial opportunity within Simbithi has in fact out-priced the residential opportunities.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com