Property Talk

Tough Year for the Real Estate Industry

For businesses in South Africa, 2019 has been a tough year. The overall GDP growth of close to zero, enormous political uncertainty and harsh trading conditions have caused many people to vote with their feet and emigrate.

For the real estate industry, it has been the worst trading environment in over ten years. For those that have survived, or even thrived, congratulations!

For those that have been hanging in there, I would encourage you to keep on, keeping on. Hold your course. Focus on essentials and income-generating activity.

I recently conducted a detailed analysis of the property sales activity for the 2019 year to Dec 2019 and compared this to the sales activity for 2018 across the main trading areas close to our Seeff Zimbali office.

I accept that there will be a few sales still to be concluded and allocated to 2019, which means that the data may adjust slightly, but on the whole, the picture will remain the same.

From my data set, I also eliminated sales that were done from one legal entity to another by the same homeowner or sales of commercial assets between partners to eliminate these outliers.

Bearing in mind that the 2018 sales were already significantly down on prior years, 2015 been the most recent multi-year peak, the stats revealed the weakness in the market and demonstrated just how tough it has been for many estate agents out there desperately trying to make a living.

Zimbali Coastal Resort had sales of R604,481,423 across 90 transactions in 2018. For 2019 the sales are down to R272,179,469 from 42 transactions.

This is a -54,97% decrease in market size by value or a -53,33% decrease by units sold. Bearing in mind that there are 67 registered and accredited estate agents in Zimbali!

The average price point for Zimbali in 2019 was R6,480,464. As an interesting comparative to Zimbali, Simbithi delivered R592,978,988 in 2018 from 156 sales with 2019 showing R357,151,421 from 81 sales. This is a -39,77% decline in Simbithi's market - not as bad as Zimbali's but still significant given the size of the Estate.

For Seaward Estates the 2018 sales were R155,683,000 from 62 properties, and R86,565,000 from 37 sales in 2019. This is a -44,40% decrease by value.

The average price point in Seaward Estates remains reasonably steady at R2,339,595 for 2019, down slightly on the R2,511,016 for 2018. The smaller boutique estates such as Port Zimbali Estate and Hilltop Private Estate have experienced different outcomes with sales at Port Zimbali Estate being steady with 2018 delivering R25,569,110 from 7 transactions and 2019 showing R26,345,000 from 7 sales - the average price holding at R3,763,571.

Hilltop Estate has experienced a -74,13% decline in recorded sales with 2018 delivering R34,796,000 from 13 sales and 2019 showing R9,000,000 from 3 sales.

Westbrook Beach held steady with only a -4,72% decline in the value of sales, with 2018 delivering R78,650,000 from 43 transactions and 2019 recording R74,935,000 from 36 sales.

Wishing you all a happy and safe holiday season and Blessed Christmas.