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Gautrain to Boost Sandton Demand
Joan Muller
8 June 2005
The billions earmarked for new office, retail and hotel developments near the Gautrain station in Sandton, is expected to have a huge spin-off for the area's residential property market.
Jack van der Merwe, CEO of the Gautrain Management Agency, says some 150 000 sq m of new office and retail space is scheduled for completion in the Sandton CBD over the next two years. Another 50 000 sq m of space in existing commercial buildings is in the process of being refurbished.
The expected influx of additional office workers to the Sandton CBD will no doubt create more demand for both rental and owner-occupied residential accommodation. Van der Merwe, who earlier this week outlined details of the Gautrain project to members of the SA Property Owners Association (SAPOA) in Johannesburg, expects a significant increase in high-density residential developments in Sandton over the next decade.
But developers who want to cash in on the expected surge in housing demand need to get a foot in the Sandton market sooner rather than later. Van der Merwe says land prices in the vicinity of the Sandton station - currently under construction between Fifth and West Street opposite Sandton City - have already skyrocketed. One developer recently paid R140m for a 2,83ha tract of undeveloped land in the Sandton CBD, setting a new record for Johannesburg land values in the process.
The Sandton CBD also offers buy-to-let investors above average returns over the next five years. Charles Vining of Seeff Properties' Sandton office says demand for rental accommodation in the Sandton CBD has already picked up markedly over the past six to nine months.
He says there are few, if any, vacancies. And when rental stock does become available, it is snapped up quickly. Vining says there is also a growing shortage of investment opportunities in the Sandton CBD, as new sectional title developments currently under construction are mostly sold out.
This is placing strong upward pressure on prices of existing sectional title units. For instance, Vining says at 77 Grayston two bedroomed units are now selling for R1,5m, up from R850 000 three years ago.
Vining expects the sectional title market in the Sandton CBD to outpace average house price growth for at least the next five years, as demand is likely to continue to outstrip supply. - Joan Muller
Original article published at www.property24.com.
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