Rapid Rise in Apartment Demand Sweeps South African Property Market

The demand for apartments in South Africa is experiencing a sharp uptick as more individuals opt for renting over homeownership, with apartment-living becoming increasingly favoured, reports the Seeff Property Group.

While freehold property sales still dominate more than half of all property transactions nationally, the demand for apartments is surging, driving prices to new highs. Lifestyle preferences are evolving, with people prioritizing leisure time and lower maintenance, fuelling the popularity of apartment living.

Urbanization, traffic congestion, and the desire for proximity to workplaces are key factors propelling the demand for apartments, according to Seeff agents. Consequently, apartment sales have witnessed significant growth across various areas over the past year.

In Cape Town, approximately 24% of property stock comprises sectional title units, primarily apartments, contributing to a booming market. Propstats data reveals that apartment sales in Cape Town alone surpassed R6.1 billion over the past year, with the Atlantic Seaboard witnessing sales exceeding R3.3 billion. Notably, a substantial portion of these sales exceeded the R5 million mark, reflecting robust demand for high-end apartment living.

Ross Levin, Licensee for Seeff Atlantic Seaboard and City Bowl, highlights several record-breaking transactions, including multi-million-rand sales in prestigious locations such as Clifton and the Waterfront. Prices per square meter have soared to unprecedented levels, underlining the premium attached to prime apartment properties.

The CBD areas, including Cape Town’s City Bowl, have experienced a buoyant market, with apartment sales surpassing R1.2 billion. Rising demand has propelled price ceilings, with numerous units fetching prices well above the R10 million mark.

Despite challenges posed by the pandemic, Cape Town’s CBD remains an exception, witnessing an uptick in apartment sales. Similarly, Century City, located a short drive from the CBD, has emerged as a bustling hub, particularly for apartment rentals.

Helga Clemo, Seeff’s licensee for Century City, notes the area’s popularity for apartment rentals, driven by its amenities and proximity to commercial centres. Rental prices vary based on amenities offered, with some luxury apartments fetching up to R70,000 per month.

According to Rode’s Report on the SA Property Market for the first quarter of 2024, renting has become a more viable option for many South Africans. The report attributes this trend to declining national vacancy rates post-Covid, supported by elevated interest rates, which incentivize renting over buying. With South Africa’s economic outlook remaining subdued, renting is expected to remain financially advantageous in the short term, offering potential savings compared to homeownership.