Positive potential lies ahead for Durban property, says Mohammed Amra, Pam Golding Properties area principal in Durban, following the coming together of ordinary citizens from all walks of life and entire communities in recent months to clean up and assist individuals and businesses in need.
“We are seeing the public and private sector working together to help stimulate economic recovery and growth in Durban and the province, while Transnet is planning a R100 billion expansion and upgrading of the Durban Port, and Phase 2 of Dube TradePort is already well underway.
“From a property perspective, the central city area – particularly in the City Hall and Samora Machel Street (formerly Aliwal Street) area is rapidly becoming a student hub, with large office buildings being converted and reconfigured into sectional title residential apartments particularly well suited to student accommodation,” said Amra.
He said this is underpinned by the fact that the city of Durban has an abundance of educational institutions such as MANCOSA, Damelin, Damelin Correspondence College Campus, University of KZN, Durban University of Technology, Central Tech College, MSC College, Durban City College, Thekwini College, among others.
However, many people, including a younger generation, work in the city for the likes of government departments such as the police services and hospitals, or recruitment, transport, clinics and call centres.
“With many people now working from home or relocating to smaller offices in areas such as Umhlanga, this has opened up redevelopment and investment opportunities to take up the vacuum. In addition, some residents have moved from the CBD to acquire homes in the Essenwood/Musgrave areas.
“While most of the owners and operators of these conversions are major investors who charge a rental of around R3,000 per student, providing the bed and study table plus communal dining room, TV room and laundry facilities according to university specifications, there remains a market for individual investors who acquire one to three-bedroom flats to let out to students,” Amra said.
Pam Golding is marketing a prominent commercial property in Durban – the 19-storey Escoval House, which is completely vacant and ideal for conversion to student accommodation.
“We are currently marketing Escoval House, together with two other adjacent buildings, for a combined price of R160 million, which adds to the potential for redevelopment. Another well-known landmark building, 320 West Street (Dr Pixley Kaseme Street), has already been converted to residential use.
“In Saxony House in Samora Machel Street, we are also currently marketing a bulk unit of 19 separate flats, comprising 10 one-bedroom and nine bachelor units, for R6.5 million. The building includes an elevator, 24-hour operated security including burglar bars and security gates, and cellular coverage.”
Sectional title dominates
Over the past decade, the central Durban area, which mainly comprises sectional title units (97.5%), has achieved a price growth of 51.1% – comfortably beating Durban’s overall average price growth of 40.2%, Pam Golding said.
Prime positioned North Beach, which comprises almost entirely sectional title units (99%), slightly outperforms the central city, with growth in prices over the past decade of 57.6%.
Sandra Gordon, Pam Golding Properties senior research analyst, said: “The median price of sectional title homes in central Durban has risen steadily over the past decade, currently averaging R420,000 for units sold across the market in 2021 to date. Both activity levels and prices in the inner city housing market remained resilient despite the pandemic and the repeated lockdowns.
“Notably, with just over 40% of all recent buyers being young adults, this age profile suggests that many first-time buyers have purchased homes in the area during the past 12 months (August 2020 to July 2021).
Gordon said that in the Point area, where 98.3% are sectional title homes, the age profile of existing homeowners and recent buyers are very similar to the pattern seen in Durban Central, with 46% of recent buyers aged between 18 and 35 years.
In both areas, Gordon said that a quarter of existing owners are retirees. At the same time, the largest cohort of new buyers are young adults, suggesting a clear demographic shift in the housing market in Durban Central and surrounds as students and first-time homeowners take advantage of the new residential units released onto the market.
Amra said that the prices of apartments in the central city offer good value for money for savvy investors. “For example, near the City Hall, you’re looking at between R250,000 and R400,000 for a bachelor unit, while in Samora Machel Street, which runs into the Esplanade, a one-bedroom unit without parking can fetch approximately R450,000 to R500,000.”
In Prince Street, Pam Golding Properties recently sold a 95sqm, two-bedroom sectional title apartment for R575,000 for cash to an investor who renovates and resells units.
Meanwhile, on the Esplanade itself, for a bachelor unit, you’d pay R300,000 to R400,000, between R500.000 and R800,000 for two bedrooms, and from about R800,000 for three bedrooms.
“Investors who buy to let often achieve sound returns of 7-9% per annum, with one-bedroom units generally renting for between R5,000 and R7,500 per month, two-bedrooms between R6,000 and R10,000, and three bedrooms from R7,000 to R13,000, depending on the location.”
Elizabeth Daniel, Pam Golding Properties agent in central Durban, said: “As conversions become more common and the demographic in the central city changes, with more young people moving there, the commercial element of the city will also change, with takeaways, entertainment venues and small shops superseding large department stores and sit-down restaurants – naturally once the lockdown regulations ease.
“Most of this rejuvenation is taking place as a result of confidence in the city centre by private investors, who are not only improving the buildings but also the surrounding areas to make them more attractive as residential destinations.”
There is good value available in the Point Waterfront area, with one-bedroom apartments priced from just under R1 million/R1.2 million to R1.6 million, two bedrooms from R1.9 million to R2.5/R2.6 million, and three bedrooms from R3 million to R9 million, said Amra.
“The Point Waterfront attracts a range of home buyers from young professionals and investors for a holiday letting to leisure buyers seeking holiday homes, including those from further inland in KwaZulu-Natal.”
Unlike Durban Central and The Point, in the North Beach area, mature buyers accounted for the largest percentage of recent buyers (38%) and existing homeowners (38%). In comparison, a further 26% are pensioners.
Gordon said price performance in North Beach has been relatively strong, with increases of 15.3% over the past five years and 50.8% over the past decade.
The median price of R890,000 recorded in 2021 is the highest seen over the past 10 years.
“North Beach is home to some highly sought after and prestigious apartment blocks, such as Malington and Maluti, good examples where a two or three-bedroom unit can sell for as high as R3.5 million in the former and R5 million in the latter.
“These apartment blocks are also in demand among Gauteng buyers seeking second or leisure homes. Currently, we are marketing a couple of apartments in Maluti with sweeping ocean views, each priced at R5 million,” said Amra.
In the upmarket Musgrave/Essenwood areas, while sectional title units dominate the market (78.4%), there are more freehold homes compared to the above areas. Although young adults are not the dominant age group among recent buyers, they account for almost a third of recent buyers, said Gordon.
“Prices have performed well over the past decade, with freehold properties gaining 72.8% over the past 10 years and sectional title homes increasing by 36.4%.”
Amra said prices of apartments in these areas could range from around R1.2 million to R1.7 million for two bedrooms and houses from R2.5 million or R3 million up to R10 million. “At present, we are marketing two brand new, fully-fitted apartments, each priced at R5.5 million, well situated just off Musgrave Road in Springfield Road.
“In addition, we are marketing a brand new 24-unit residential development, 748 on Musgrave, with spacious three-bedroom units priced from R5.85 million and R7.35 million, with double garage included.”
Pam Golding pointed to the high demand for homes in Cowey and St. Thomas Roads. At the same time, oher sought-after areas include the Florida Road hub, with its eclectic mix of buildings and array of eateries and entertainment, and nearby Innes Road.
Another trend concerning the smaller student housing market is investors acquiring large, old houses and garden cottages for conversion to student accommodation. These may be situated in Glenmore, Umbilo, Carrington Heights, Glenwood and Bulwer, said Amra.
“These areas also tend to be popular among young families because of the size and value for money on offer as well as access to good schools. In upper Glenwood, where homes are immaculate and huge, there is also good value to be had with three to four-bedroom houses often selling for approximately R2.5 million.”