Purchasing off plan is an easy way to get onto the property ladder or extend your investment portfolio. Here’s a rundown of developers’ latest and most appealing off-plan offerings.
WORDS: DEBBIE HATHWAY – IMAGES: SUPPLIED
Nobody could have foreseen the impact of the Covid-19 outbreak on life in general, let alone on real estate. However, the digital-first property company PropertyFox anticipated a need for continued evolution of on-demand experiences in 2020 – and it was right on the money.
With more millennials entering the market for homes, PropertyFox predicted that real estate companies would use big data and machine learning in smarter ways to make consumer experiences even more seamless.
“At the end of a decade of property industry disruption, we saw homes sold online for the first time, with low commissions shaking up traditional notions of how property should be bought and sold,” says PropertyFox CEO Crispin Inglis.
As investors are fast getting used to the idea of a purely digital purchasing experience, buying off plan – with its bespoke offerings and benefits – is suddenly looking really attractive.
“Now, more than ever, the discerning investor should be focussing on the basic fundamentals of property investment,” says Amdec Property Developments MD Guy Gordon. An investment where you don’t have to worry about maintenance is highly desirable.
That’s why many investors are buying off plan. “The Covid-19 crisis is reshaping the way people choose to live, so buyers and tenants need to be far more discerning before committing to a lease or a bond,” says Gordon.
“Mixed-use developments such as Harbour Arch in Cape Town represent the pinnacle of convenient, contemporary modern living, making them an attractive proposition for savvy investors looking to take advantage of the lowered interest rate and favourable lending conditions.”
The South African Reserve Bank’s latest reduction of the repo rate in May saw the prime lending rate fall from 7.75% to 7.25%. Buying off plan is a great option whether you are buying to let or to live in the property yourself.
Sectional title units are the most common type of real estate sold this way, with many developers offering a choice of layout or floor plan for units of various sizes within the same complex.
Depending on when you buy into a development, you could be offered a range of fixtures, finishes and paint colours, allowing you to tailor your new spot to your taste.
Reasons to buy
If you purchase off plan from a developer, the transaction does not incur transfer duty. It’s also viewed as a good investment for rental returns.
Time is on your side too, says Kent Gush of Kent Gush Properties. “When you’re investing in something like Ellipse Waterfall, a luxury high-rise tower in Waterfall City, Midrand, there’s as much as a two to two-and-a-half year wait from when you buy the apartment until the date you take delivery of it. You’re enjoying the capital growth for that period, which is further enhanced as the precinct itself develops.
“People who bought in the beginning are already seeing 10% to15% growth in value. In addition, if a buyer puts down a 10% deposit at the current interest rate of 7.25%, they’re almost cash neutral from day one,” he says.
“We haven’t seen that situation for some time in the property market.” Gush says his company never overpromises when it comes to rental yields. “We’re talking about 7% to 7.5% at Ellipse Waterfall.”
According to Steyn City sales manager Lambert Bezuidenhout, purchasing off plan has long been touted as the ideal way for investors or first-time buyers to purchase property, as their payment commitments start only on delivery.
This can be up to 12 or 18 months from the date of purchase – sometimes even longer.
“The price of these units typically includes VAT. That means the purchaser can finance the tax portion of the purchase price rather than paying transfer duties upfront in cash on private sales or resales, which puts a higher burden on cash availability for the buyer,” Bezuidenhout says.
“Off-plan purchasers must realise that their property is forward priced to allow for financing and holding costs during the Tricolt’s Ellipse Waterfall in Waterfall City, Midrand construction period.”
Where best to invest
Selected developers recommend their most attractive off-plan options:
Kent Gush of Kent Gush Properties
We launched Ellipse Waterfall in Midrand in an incredibly soft market in November 2018. It’s the most successful project I’ve ever undertaken in the most difficult market I’ve experienced in 35 years.
We’ve sold more than 300 apartments with a value of more than R850m in the past 18 months. The project has magnificent architecture that has captured the imagination of the public.
And Waterfall as a precinct works. It is almost Dubaiesque. Every touchpoint is triple A-grade. The quality of the finishes is as good as a that of a luxury apartment in Sandton; only the units are smaller.
There are 45 apartments left of the 272 launched in the Newton and Kepler towers. We’ve sold about 50% of the 180 apartments in Cassini, the third and tallest tower. Luna Club, which covers 1,100m2 on the ground floor of Cassini, incorporates a gym, a heated lap pool and a leisure pool, private dining facilities and a private wine cellar.
Balwin Properties founder and CEO Steve Brookes
JSE-listed Balwin Properties launched Munyaka Lifestyle Estate in Waterfall, Midrand, in the early stages of the coronavirus pandemic, selling 555 apartments totalling R850m in four days.
One of the major attractions of this development is a crystal clear lagoon the size of seven rugby fields. Other facilities include a 6 Green Star-rated lifestyle centre (with free access to a gym), squash courts, an on-site concierge, restaurants, meeting rooms, a heated pool, laundromats, a cinema room, a wellness spa and a children’s play area.
A total of 5,020 apartments will be developed at Munyaka over the next eight years. One- to three-bedroom units start from R799,000.
Craft Homes MD Reinier van Loggerenberg
Craft Homes traditionally enjoys more engagement online, with appointment booking forms and virtual tours available at crafthomes.co.za. Buyers can reserve or purchase units online that offer the best value in niche markets.
Craft Homes offers developments that cater to what the market wants at different life stages. The Woods in Kyalami, next to Kyalami Corner, has a mix of apartments and freestanding homes. Phase 1 comprises 63 apartments and 52 duplexes, whereas Phase 2 is planned with 102 apartments and 43 duplexes.
The development is surrounded by a green belt and incorporates a park, a clubhouse and kids’ play area.