The Garden Route has shown that it is not immune to the economic downturn, with an increasing number of properties experiencing substantial stress. This is evident in an upcoming auction on 11 October, where over 15 distressed Garden Route properties will be taken to the auction floor.
According to Rael Levitt of Auction Alliance, “Whilst prices for residential property have cooled off across the board in South Africa, the areas which are seeing the greatest drops are those outside urban metropoles. In resort areas, property prices have dropped the sharpest because they are often secondary house markets, and are not viewed as essential investments”.
Despite the global downturn, South Africa is still rapidly urbanising and people are flocking into major urban centres such as Johannesburg, Durban, Cape Town and Pretoria. Prices are expected to remain relatively more buoyant in these areas because there is an emerging buyer market, particularly at the entry level. Areas such as the Garden Route, which have seen the strongest new property developments over the last 5-7 years, are the markets now suffering the greatest decline.
“Property is simply about supply and demand, and where supply has been strong in terms of development, prices and markets are now slumping. A burgeoning trend within the sector is that it is a real buyers market right now and buyers, particularly first time home owners, are being offered a historic opportunity to get into the market at significantly reduced prices”.
Three years into the residential property downturn, a number of larger property developments are falling into distress. The distress began at retail level where individuals could not keep up with their repayments, and bank repossessions and distressed sales soared. This peaked in 2009, and now it’s the turn of the larger developers. There are currently a number of large property developments in the Garden Route, that are experiencing substantial levels of distress, and high value liquidations such as Le Grande George, Hartenbos Landgoed, the Hartkorp Group, Fernwood Estate and Pinnacle Point are indicative of this.
“Whilst the market is generally quite weak, and the sector will take some time to return to strong growth patterns, there is no better time to buy than at the bottom of the property cycle. Although one can never time the top or bottom of any market, my sense is that we are bumping along the bottom right now and that it is a brilliant time to get into the market”.
Some of the notable properties which will be auctioned include, a 3 bedroom apartment in Mossel Bay with beautiful sea views, development land in the prestigious Oubaai Golf Estate, a single storey home overlooking the Knysna River, a 2 bedroom apartment in Plettenburg Bay with ocean views, a spacious 4 bedroom family home in Knysna and 4 industrial units in Wright Business Park in George.
The auction, which has already attracted interest from numerous buyers, takes place on October 11 at 12pm at the Fancourt Hotel and Golf Resort, George.