The total number of properties sold in Stellenbosch in the first five months of this year is only half that sold for the same period in 2013, but the problem is a lack of stock rather than buyers.
This is according to Chris Cilliers, Principal of Lew Geffen Sotheby’s International Realty in the Winelands, who says agents in the town are battling to source enough stock to service the current demand.
According to Western Cape property sales aggregation website, Propstats, property valued at approximately R27 million has changed hands in Stellenbosch proper since the beginning of the year. This excludes sales in the rural surrounds. In the same period last year, sales to the value of some R50 million were concluded.
The average price of the properties sold has increased to R1.47 million in the first five months of this year, from R1.35 million for the same period in 2013.
While some properties have sold for around R20 000 per square metre, which is on a par with several Cape Town suburbs, many properties have sold for considerably less and the town still provides great value for investors, says Cilliers.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says Stellenbosch is an excellent investment location largely because of Stellenbosch University.
“There are more than 25 000 students in this one small town, and only a fraction of them get bunks in residence. The rest have to find private accommodation, more than 95 percent of which is rented accommodation rather than parents buying apartments as many tend to do in Cape Town.
“Parents often buy flats in close proximity to the University of Cape Town because they use them as holiday homes when their children graduate, or they plan to keep them for retirement.
“The demographic is a little different in Stellenbosch, which means it’s an investor’s dream.”
Cilliers says in Stellenbosch one can buy bachelor or small one bedroom flats that can accommodate two students, for R450 000 and upwards.
Bigger two or three bedroom flats will sell for around R1 million to R1.5 million, depending on their condition and proximity to the campus. Walking distance is, of course, prime investor real estate.
The rental market for luxury houses is also exceptional in the town, because several international corporations are headquartered there.
“Most big multinationals rent properties for their international senior executives, who spend anything from a few months to a couple of years inSouth Africa at any one time.
“It means there’s a continually circulating, healthy-sized pool of international clients needing secure, upmarket accommodation.”
Our biggest problem in Stellenbosch at the moment is a lack of sale stock, says Cilliers.
“We’d like to see the market far more fluid than it is now. People are holding onto their properties hoping to see prices rise, but we’re running the risk of the market stagnating and that’s never a good thing in a small town.”