MAIN IMAGE: Samuel Seeff, Chairman of Seeff Property Group; Carol Reynolds, Pam Golding Properties area principal for Durban Coastal; Sandra Gordon, Research Analyst for Pam Golding Properties
South Africans have traditionally preferred free-standing homes, but changes in ways of working, security, and price are creating a shift to sectional title properties. Lightstone data, indicates that sectional title registrations have increased by 40% year-on-year and by 50% quarter-on-quarter, while freehold registrations have increased by just 26% and 42% respectively.
Samuel Seeff, Chairman of Seeff Property Group says that “There has indeed been a significant rise in the demand for not just sectional title property – being convenience a mix of apartments (including those in estates) and townhouses – as well as properties located in estates in general. Most new developments over the last decade-plus are in fact predominantly sectional titles and estates”.
Why are buyers opting for sectional title properties?
Location, location, location
According to Seeff key reasons for this include the shortage of land, especially in the urban areas which means that densification and medium- to high rise developments are potentially the only way to accommodate the urban influx which is so prevalent in the country. Carol Reynolds, Pam Golding Properties area principal for Durban Coastal, shares that this move towards densification is enabling homeowners on larger erven, to sectionalise and create small boutique complexes with the benefit of shared security costs. Developers are seizing these opportunities and small complexes are becoming more prevalent.
Sandra Gordon, Research Analyst for Pam Golding Properties concurs stating that “With a young, rapidly urbanising population there is growing demand for sectional title properties. This is partly because land is scarce and expensive in business hubs, so a smaller property is more affordable for first-time buyers. Demand for sectional title is also driven by lifestyle choices. Younger generations typically prefer secure, lock-up and go properties”.
Gordon believes this is reinforced by the new trend towards shared spaces – with micro private units in a development with co-working and co-living, shared spaces. Not only does this make property ownership more affordable but it also creates a sense of community which has been lost to a large degree in traditional suburban areas amidst security concerns.
Security
Seeff shares that “Security and compact living are vital reasons for the growth in demand as well. SA’s cities continue to expand, traffic continues rising, hence our agents are seeing buyers increasingly looking for homes which require less maintenance and offer more security”.
Cost saving
Reynolds believes that “The move towards security, less maintenance and reduced housing sizes is on the up and up, because the costs of maintaining large freestanding homes is becoming unattractive. With water supply issues, and power supply issues, smaller homes are more desirable as they are more energy efficient.”
Which provinces are showing the most growth?
According to an article by Johan Jacobs & Malcom Moodie attorneys Gauteng has always been the frontrunner when looking at sectional title sales by province. Gauteng accounts for more than half of all sales nationally, while the Western Cape and KwaZulu-Natal take 2nd and 3rd place (with 18% and 14% of sales, respectively).
They believe that the market is drastically shifting, though, with the Eastern Cape’s sales increasing by 28,3% over the past four years. Growth in the other provinces has been substantially lower, with the Western Cape even showing a decline of 4.9%. When it comes to revenue, however, the Western Cape is still in the lead, dominating the R3 million+ property market. The Western Cape market saw an exceptional rise in sectional title sales between 2016 and 2018 with an influx of sales born out of the semigration trend. In the following years, the sales have metered out and plateaued again (however, still leading in the upper market spectrum).
Gordon adds that the availability of surplus office space in business nodes in the post-Covid era provides new opportunities for well-located residential developments, which is likely to reinforce the shift towards sectional title homes. “These can be both high-end – such as Cape Town CBD – but also the more affordable market, such as Johannesburg CBD with areas such as Jewel City where commercial buildings are converted into mixed-use precincts offering pedestrianised access to retail outlets, outdoor space, rental accommodation and close proximity to work”.
While life stage generally plays a large role in terms of the choice between sectional title properties (for example first time buyers, investors and retirees) and full title homes (young families), it does seem that the benefits in terms of cost, lifestyle and security is fuelling a shift to demand for sectional title properties.
