Current trends show that buyers have been gravitating towards smaller properties that are centrally located, more affordable and within close proximity to amenities and services.
These requirements, including reliable security and lock-up-and-go convenience, are increasingly taking precedence over size and suburban curb appeal.
This trend, which makes mixed-use developments more appealing, is not only being seen among investors but also first-time buyers, says Nic Stopforth, managing director of Amdec Property Developments.
Statistics show a steady increase over the past three years - from 30% to 39%, in the number of home loans granted to first-time buyers. There has also been an increase in the number of 100% bonds being granted, with some lenders extending home loans to include legal fees, transfer and bond registration.
More price-conscious buyers are therefore taking advantage of the favourable lending conditions and electing to invest in premium mixed-use precincts within thriving metropoles because they offer greater returns in terms of rental potential and capital growth, Stopforth says. The rise in popularity of mixed-use precincts stems largely from the markets’ increasing need for convenience, safety and security, and a greater sense of community.
“Given the economic challenges facing the majority of South Africans presently, it’s more important than ever to seek out properties that offer long-term capital growth, as opposed to simply a home or roof over one’s head.
“Buyers simply can’t afford to incur additional costs linked to security, maintenance, repairs and renovations, just because the asking price of a property seems right at the time.”
Demand for low-maintenance sectional title properties has remained relatively high, in comparison with larger freehold suburban properties with costlier overheads, which are sitting on the market for increasingly long periods of time.
“Your home is an asset, so it’s important to invest in a home with good appreciation prospects. Local and overseas buyers are wisely gravitating towards mixed-use precincts as affordable options.”
For investors seeking diversification in order to balance their portfolios, investing in mixed-use precincts also guards against the risk of large-scale vacancies, when compared with single-use properties. With an assortment of tenants vying for multiple forms of occupancy, owners can boost rentals accordingly to strengthen both net income and net operating income.
Stopforth says sales on Amdec's mixed-use developments in Melrose Arch in Joburg and in Cape Town at Harbour Arch have shown global demand for combined residential, commercial, retail and leisure living spaces. "It’s an asset class that has grown exponentially across the globe and South Africa is no exception,” he says.