Millennials Attracting Millennials To Invest In Cape Town’s Expensive Property Market

0
198

“We spend a lot of time educating our tenants and first-time buyers around what goes into buying a property, by explaining bond intricacies, and matching them up with the right originators or attorneys,” says Emanuel Germanis, founder and managing director of Evo Properties in Cape Town. “We do this with understanding, care and empathy, and younger buyers who have no experience and may feel nervous about the process appreciate this. There’s nothing better than empowering someone to allow them to own their own home.”

Evo Properties, a sales and letting property-brokerage and property-development consultancy, was launched six years ago by Germanis, his brother, Stephan, and friend Matthew McWilliams. Today the company manages several hundred tenants for local and international investors, in residential properties across the Southern Peninsula.

“We experienced only a 10% drop-off in collections and tenant numbers during Covid,” says Germanis, comparing this to “market norms of between 30% and 40%”. He attributes Evo’s good figures to “our tenant and owner mix of younger professionals who remained employed, coupled with how we reached younger tenants and buyers and what we educated them on: that property is in fact affordable. There’s a false impression that there’s a huge cost involved with buying a property, but in essence, if you have a good job and decent salary, you can actually buy with very little.”

Germanis is well aware that lack of experience in the property-investment market doesn’t equate with lack of common sense. “Younger buyers want to see us walk the talk,” he says. And Evo does just this: the three-man team itself is young, all being under 30, and they’ve all put their money where their mouths are. “Buyers see us owning our own property, so they ask us for our advice a lot, and being able to report back that experience and insight to them makes them feel more secure.”

Next year, through Evo’s impressive property-development consultancy, the company will launch four new developments, one of which is a 21-unit micro-apartment block going up in Woodstock’s Cavendish Square, opposite the police station which it will retain full ownership off and rent out the apartments. The company’s track record in this blossoming inner-city suburb includes the full consulting and management, including sales, of Urban Artisan Apartments, the 51-unit residential and retail property development a stone’s throw from Woodstock’s bustling Biscuit Mill. Germanis and his team are also working on a new affordable housing development called The Archive in Observatory, where a 30sqm apartment will sell at R799 999. “Developments have always been an attractive option for homeowners because of the low initial transaction costs, such as not paying transfer duties or sometimes no attorneys fees,” Germanis says. Now, with Covid, dropping prices for new units are allowing first-time buyers to invest in a would-be expensive area, which is proving especially appealing for tenants who want to buy, or would-be buyers in outer-lying areas.

FNB’s Economics Weekly report for 11 December 2020 reflected a 3rd quarter 71,1% increase on a quarter-on-quarter (q/q) and seasonally adjusted annualised rate (saar) for construction-sector production, on the back of a rise in the number of residential buildings, non-residential buildings and construction works. This in line with South Africa’s middle property market (R750k-R2,6mil) showing the greatest improvement in activity, with the recovery driven mainly by younger (under 35) first-time buyers taking advantage of competitive pricing, lower transfer duties and interest rates at a half-century low with prime at 7%. Industry-wide data cited in FNB’s Property Barometer report for November showed that mortgage applications were reaching multi-year highs; year-to-date applications volumes are approximately 9% above the same period in 2019.

Germanis says his company has experienced this on the ground, with millennials buying now. For example, he says, “Despite a perception that the student-housing market took a battering, we actually saw the opposite.” Younger would-be buyers across all racial groupings who’d been living with their parents or in Cape Town’s outer-lying suburbs are now deciding to move out and are looking closer to town, in areas like Mowbray, Observatory and Woodstock, where the social benefits include making new friends, building communities in hip, up-and-coming neighbourhoods, and saving on transport costs. Properties that previously accommodated students in communal setups are now being converted into multi-let arrangements, and are attracting a growing number of out-of-towners, both local and from Gauteng, into suburbs close to the University of Cape Town and Cape Town’s CBD.

“There’s big demand from young professionals, men and women in their 20s, who work for the likes of Amazon or Woolworths Financial Services. Low interest rates, but also a demand for more privacy and space for them to work from at home, is really driving demand.” This goes hand-in-hand, Germanis says, with a trend of owners spending more on renovating their properties and enlarging their workspace areas.

But the central city isn’t the only area showing impressive growth. “The market is showing us that people are believing in their own place of residence,” says Germanis, especially when looking at suburbs like Mitchells Plain. “People who work for Telkom, Eskom and SARS, for instance, earn excellent salaries and want to remain in those areas, whether it’s buying for the first time or investing in something a little bigger.” Colorado Park has become the Bishopscourt of Mitchells Plain, he says. “We sold a property there for 15% over the asking price within 48 hours.” Germanis puts this down to not only people responding to the company’s online ads and social media, but also word-of-mouth. “Those areas are heavily community-driven, and everyone’s chatting to everyone else, so word gets out about a particular property.”

Digital marketing has remained at the forefront of how, Matthew McWilliams, Evo’s marketing director, has grown an impressive database of postgraduate students and young working professionals wanting to buy or rent. “Facebook and Instagram remain our top platforms, but we also see plenty of traffic through our website and first-to-market online apartment reservation system.” If tenants see an apartment they’d like to rent, they can reserve it online through Evo’s system. “Keeping our website super-current, especially with great interactive renderings, helps buyers in Gauteng make easier decisions regarding Cape Town options,” he adds.

LEAVE A REPLY

Please enter your comment!
Please enter your name here