A South African buyer has snapped up the ocean-level Clifton 3rd Beach bungalow on the Atlantic Seaboard in an auction held earlier this month.
The property, which is one of only seven properties with direct beach access, sold for R17.84 million.
According to High Street Auctions director and lead auctioneer Joff van Reenen, the seller of the property approached the group looking for a “true market value” for the asset.
The Atlantic Seaboard is known as one of the highest-valued property markets in South Africa, with average prices ranging R12 million (Bakoven) to R24 million (Clifton) at the end of 2019.
However, in recent months, under strained economic activity, the top-end of the market represented by the area has come under pressure.
“There has been a substantial market correction across every fixed asset class nationally because of massively depressed economic sentiment, and the top end of the residential sector is feeling the effects,” van Reenen said.
“The real estate market is cyclic, though, and it often takes sellers a while to catch up when this changes.”
Van Reenen said that there is still a fairly large gap between most sellers’ price expectations and current market levels.
“The sooner sellers realise this, the sooner they’ll begin to realise true market value for their assets, and at auction conclude a sale which in today’s market is key,” he said.
The average time a property in the luxury band sits on the market is in excess of six months and can be higher than 18 months, he noted.
Van Reenen’s sentiments are echoed by real estate analytics group Lightstone, which recently forecast that the luxury residential market segment will experience even greater price corrections this year.
Lightstone noted that in a scenario in which South Africa’s GDP declined by only 3% – even with historically low lending rates – luxury property prices would likely fall by 5.9%. If the fallout from Covid-19 was such that the local economy shrunk by 10%, luxury properties could lose almost 20% of their value.
The bungalow that was auctioned this month boasts two en-suite bedrooms, quality finishes, a well-appointed kitchen and open-plan living space that flow onto an expansive entertainment deck.
The deck offers a separate combined service bar/kitchen and a jacuzzi, both just a few steps from the beach itself.
Van Reenen said that a massive bonus for such a stringently regulated zoning area is that plans have been approved by the city council for the house to be extended onto the deck and for the height to be increased. The approved plans also make provision for a swimming pool.