Gareth Bailey, area principal for Durban Coastal at Pam Golding Properties, says it's an intriguing task to keep up with all the news and figure out what it means for investment economics. "Despite heightened global volatility, the Rand has defied forecasts and held, and South African assets remain a desirable alternative throughout the world." Surprisingly, throughout the Covid era, the residential real estate market has remained strong. This is due to growing wages, the rise of the work-at-home trend, and the banks' insatiable need for quality loans. FNB's March Property Barometer Survey shows that although national home price growth has slowed over the previous two years, it has remained constant at around the 4% level, with locations like the North Coast of KwaZulu-Natal and the Western Cape surpassing this national average.
During the last five years, billions of Rand have been spent on the residential off-plan sales of our North Durban suburbs, causing a rush of building activity. Many people wonder whether it's a smart idea to purchase a house off the plan rather than an already built one.
While there are some drawbacks to purchasing a property before it is completed, if you take certain precautions you should be able to enjoy your new construction and reap the financial benefits of your investment for many years to come.
According to Bailey, the reputation and history of the developer and the professional team are crucial considerations when purchasing off-plan, as they indicate how likely it is that the construction will be completed on schedule and according to the specifications agreed upon. While the price of off-plan houses is often more than the price of existing properties, one must keep in mind that off plan properties in Dubai are brand new, and buyers have the opportunity to report any faults to the developer at handover for repair. Buyers may rest easy knowing they won't have to spend a tonne of money on repairs for at least a few years thanks to this and the building's warranties. The Voetstoots clause, which translates to "acquired in the existing state at the purchaser's risk," remains in effect to the degree that any latent (hidden) faults develop despite the new Property Practitioners Act requiring agents to get a written declaration of deficiencies upfront from sellers. Sellers cannot use the voetstoots provision as a shield if they misrepresent the condition of the property or try to avoid responsibility for defects they know about but fail to disclose. In addition, owing to the property's age, the buyer will be responsible for any maintenance, repairs, or renovations that come up after the sale is finalized. Another consideration is that the purchase price of an off-plan property already includes VAT, so no additional transfer duty is due at closing. Transfer tax is still a consideration for buyers of preexisting homes. The amount varies depending on the price of the home, starting at roughly R90 000 for homes valued at R2.5 million and going up to around R250 000 for homes priced at R4 million. Although banks are happy to base their loan offers on the full asking price, including VAT, they often ignore transfer duties when approving loans for preexisting properties. Off-the-plan homes typically come with the introduction of brand-new neighborhoods with spectacular views of the ocean or a variety of other features not yet available in the local real estate market.
According to Bailey, people are increasingly choosing to settle in estate and sectional title communities because of the safety and convenience these provide. "Although Covid has reversed this tendency by increasing demand for detached houses that give greater room for a home office and the option to maximise lifestyle at home," "I expect that the long-term trend will restart at some moment, and this will prop up price rise in these sorts of properties." Crucially, off-plan purchases allow investors to lock in a brand-new home that can be tailored to their exact specifications at today's prices, all while benefiting from the appreciation that occurs between the date of signing and the date of the handover, which is typically 12 to 18 months later. Throughout the last several years of Covid, we have introduced two apartment building projects to the market, and they have both been huge successes. The Kent development in La Lucia (on the former site of the La Lucia Mall) sold out in under a year, while The Onyx on uMhlanga Ridge Boulevard (just across from Busamed Gateway Private Hospital) is almost sold out. York at Sanctuary Private Estate, situated on a greenbelt in front of FNB Umhlanga Ridge, was just released this month (April 2022). One-, two-, and three-bedroom apartments with sweeping views of the sea and natural landscape have been thoughtfully designed by FWJK. Included in the starting price of R1.695 million is VAT. A major selling element is the majority of the units' access to on-grade parking, which places vehicles on the same level as dwellings. What sets Sanctuary Private Estate apart is its proximity to the adjacent greenbelt, where residents may go for walks, exercise, or fish without ever leaving their neighborhood. We expect this new home development to be warmly appreciated by the market because of the attractive price and central uMhlanga location on uMhlanga Ridgeside.
While there are some drawbacks to purchasing a property before it is completed, if the opportunity presented by off plan properties in Dubai is compelling enough, it is possible to reap long-term benefits in the form of improved quality of life and increased property value by working with a reputable development team.
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