The Gauteng metros present unparalleled value for property buyers and investors right now, says Samuel Seeff, chairman of the Seeff Property Group. Buyers should use the interest rate savings, and opportunity to invest at the current historically low prices.
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You can find unbelievable value, even in the luxury areas where you can find mansions for under R10 million to R15 million, he says. While the market is picking up, it remains sluggish, largely due to poor infrastructure maintenance and management, but this will not always be the case.
Years of low growth are well reflected in the property transactions. Lightstone data shows that Joburg’s property transactions are down by over 30% in some areas. It has lost significant property value over the last few years with negative property value growth of 1.3%, the weakest of the metros, and notably below Cape Town’s 6% growth. The average property price has remained static at around R1.3 million.
Seeff says Johannesburg is not just another city in the country. For all the challenges, South Africa remains the leading democracy on the continent, and the greater Johannesburg is at the heart of this. That is why we are hosting the G20 this year, the first of its kind on the African continent.
The star power of Joburg
The star power of Joburg is undeniable. It is the financial and economic heart and engine of South Africa, and the wealthiest city on the continent. It is home to the JSE (Johannesburg Stock Exchange), the largest and most sophisticated stock market in Africa, and home to major bank and financial head offices, legal firms, and consultancies. It is the preferred headquarters for the vast majority of leading corporations, with over 70% of the country’s companies based there.
Staggering economic output
The city’s economic output is staggering, contributing almost 16% to South Africa’s total GDP and a remarkable 40% to the economy of Gauteng, the wealthiest province. It is also home to the largest concentration of wealth with nearly 15,000 dollar-millionaires in Johannesburg/Pretoria (according to New World Wealth). Captains of industry, business entrepreneurs and those who drive much of the South African economy are based here.
That property market should be pumping, says Seeff. Instead, the market is lagging at the bottom of the cycle, offering exceptional value for money which may not be repeated down the line. Right now, the cost to build is significantly higher than what you can buy for, and buyers and investors should take advantage, he says.
Enormous untapped potential
Despite its current challenges, Johannesburg possesses enormous untapped potential. It is the most populous metro with the highest urbanisation rate as people continue to flock to Gauteng in search of economic opportunities. This constant influx creates a robust demand for accommodation, including rentals, presenting lucrative opportunities for investors, with many areas offering above-average rental yields that often surpass those found in Cape Town.
The reality is that Joburg is going nowhere, it will continue expanding and there are tremendous opportunities to capitalise on, he says further. Beyond its economic might, it is a great place to live, and one of the greenest metros with great weather, and a vibrant cosmopolitan lifestyle. It has some of the best schools and tertiary institutions on the continent. The amenities are top class despite the deteriorating infrastructure, but even on this point Seeff says he believes there is an urgency that this needs to be addressed.
Man-made problems
Seeff says the problems of Johannesburg and the Gauteng metros are man-made and they demand man-made solutions. It is absolutely vital for South Africa’s economic resurgence that these issues are decisively addressed and resolved, especially with significant international gatherings like the G20 on the horizon. Beyond that, Seeff says residents and ratepayers need to get involved instead of waiting for someone else to solve the problems.
A great deal of the Cape Town renaissance from 2008-onwards was driven by businesses and private residents who funded local initiatives to drive safety and cleanliness. Investors with vision came in and started developing and modernising the CBD and surrounds. Today, it is delivering tremendous value to property investors, both corporate and private, says Seeff.
The opportunities in Johannesburg are enormous. You can currently get significantly more value for your money. There is exceptional affordability in many suburbs with pricing below R1-R1.5 million, and the ability to purchase significantly more on a square metre basis in the R3m-R5 million plus price bands when compared to Cape Town.
Even in the luxury enclaves, magnificent properties can be acquired for R10-R15 million, a scenario that is unlikely to persist indefinitely. This affordability, coupled with favourable lending conditions and recent interest rate cuts – now a full one percent lower than a year ago – offers the ideal opportunity, he concludes.
