Buyers pay R10.3bn in cash for Cape properties

Source: – Fin24, 21/09/2015

Cape Town - With homes selling within days of coming onto the market,
it seems cash is king for buyers wanting in on the Cape's scarce pool
of property hot spots.


That is the word from Seeff group chairperson Samuel Seeff, who says
that according to data from Propstats the Cape metro attracted some
R10.3bn in cash deals for the year covering July 2014 to end-June
2015. This equates to almost 60% of the total value generated across
the Cape metro.


The hot spots where cash buyers are most prevalent include the
Atlantic Seaboard, City Bowl and southern suburbs along with areas
such as Hout Bay, False Bay and Blouberg.


The Atlantic Seaboard is of course in a league of its own when it
comes to the high volume of cash buyers. Ian Slot, Seeff`s managing
director for the area, says over 70% of all transactions over the past
year have been cash deals. This translates to a hard cash investment
of just over R3.97bn of the total value of almost R5.122bn in real
estate sales over the last year.


Sales in the R20m-plus trophy home sector amount to an even more
impressive 80% of the almost R2bn in value generated across the
Atlantic Seaboard, says Slot. Most of these were local Cape buyers who
invested some R830m (about 28 of the 38 trophy homes sold) into the
area, with cash sales ranging up to R42.5m for a Bantry Bay cliffside
apartment.


In the City Bowl just over half of the deals concluded over the last
year were cash sales, says Slot. This translates to about 402 of the
753-odd units sold, just over R1.2bn of the total of around R2.03bn in
sales generated across the area.


Stand-out areas include the V&A Waterfront that has seen a significant
sales rally over the last two years with some 84% of all deals
concluded for full cash, including a Pembroke apartment sold by Seeff
for R22.75m to a Capetonian cash buyer.


Over the same period, almost 70% of all deals in Camps Bay and even
Sea Point were cash transactions, says Slot. In Clifton, basically all
of the deals over the last year were for full cash ranging to R100m
for a home recently sold by Seeff. In Bantry Bay and Fresnaye over 80%
of all transactions were cash deals.


In the southern suburbs, inclusive of the Constantiaberg area, the
cash trend too is particularly evident at the top end of the market,
says James Lewis, managing director for the area. Full cash
transactions account for about 47%, or 763 of 1 639 units sold over
the last year. This means a cash investment into bricks and mortar in
the area of almost R2.955bn of the total sales value of just over
R5.66bn.


Here too the top R20m-end attracted the most interest, with all but
two of the 12 deals worth R363.7m settled in cash. About 60% of buyers
were Capetonians.


On the other side of the peninsula more than half of the 300-odd units
worth just over R1bn sold in Hout Bay were to cash buyers, adds Lewis.
Here, too, buyers have mostly been Capetonian.


On the False Bay peninsula just over 60%, or 279 of the 455-odd sales,
were cash deals, according to Gary Grobbelaar, chief executive officer
for Seeff`s operations in the area. This translated into almost R630m
in hard cash invested into the market here, largely because of rising
prices in other areas of the peninsula.


In the greater Blouberg area, 629 of the around 1 679 deals concluded
across the region over the last year were cash transactions. This
accounts for just under 40% of all deals.


On the whole it certainly says something for buyers' confidence in the
Cape property market if they are prepared to invest hard cash in
bricks and mortar here, says Seeff.


On the Atlantic Seaboard, the current price gap (average difference
between the asking and selling prices) for the last year now stands at
around 7.9% while it is 5.9% in the City Bowl. Both areas are still
seeing significant stock shortages.


For the southern suburbs, Hout Bay and False Bay areas the price gap
is at 7%-9%, but in the Blouberg area it is now just 4.5% on average,
says Seeff.


The key advantage of buying cash is that it propels you to the top of
the list of competing buyers and puts you in a much stronger
bargaining position. For the seller, it generally means a relatively
quick deal as these transactions are usually not linked to a buyer
having to sell a property first.