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KZN North Coast: The sweet spot

KZN North Coast: The sweet spot

KZN’s North Coast may be one of the hottest investment spots in the province – arguably, the country. Who’s investing and are holiday homes getting a look-in?

Strung along the KwaZulu-Natal North Coast from Durban to Blythedale, one blossoming town after another is becoming increasingly independent of big brother Umhlanga. These little villages, previously too distant from economic hubs to be considered primary residential locations, now not only have easy access to those hubs but have become hubs themselves.

Not that long ago, property statistics in little towns like Umdloti and Sheffield Beach were weighted towards holiday homes, but improved transport links have shifted that balance. In Sheffield Beach, for instance, investors can tick the box for a smart location in the prized and proven North Coast belt, yet still enjoy small-town peace and quiet, views and glorious beaches.

Last year, Cenprop Developments, who’re behind Dunkirk at Salt Rock, launched Loxley, a boutique estate of 27 plots – 1 000+m2 sites with sea views, with an appealing price tag of under R2 million. Cenprop’s Kevin Swart estimates the estate will comprise 80 per cent primary residents, 60 per cent of them 30- to 45-year olds, either without kids or with young families. Holiday-home investors are Durban locals keen for an easy weekend getaway, or Gauteng based. Many estates shy away from short-term holiday rentals, so these will be owner-occupiers.

Development on the KwaZulu-Natal North Coast is dynamic and relentless. The massive migration of people into the area has spawned new private schools, hospitals, residential estates and commercial business parks. ‘KwaDukuza Municipality is predicted to grow at a steady six per cent per annum over the next three years,’ says Neil de Beer, Pam Golding Properties’ area manager Ballito. Investors range from residents of Gauteng, Mpumalanga and the Free State, to returning UK and Canadian expats, and international investors/swallows who stay for the summer months.

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Seeff’s Dolphin Coast principal, Andreas Wassenaar, considers Ballito’s new R46-billion mall as one example of a large-scale project that has become feasible because of development, and which will in turn be a catalyst for further development.

Gated-estate living is the most buoyant sector for residents and holiday-homers. Wassenaar points to Zimbali Coastal Resort (recently voted the best estate in the country), Simbithi Eco-Estate, Dunkirk Estate, Brettenwood Coastal Estate and Palm Lakes Estate as hotspots.

Estate living is increasingly first prize, particularly for young families. De Beer pegs buyers at an estate such as Simbithi as between ages 30 and 50, while 74 per cent of recent Zimbali buyers fall into the 18- to 49-year-old range – 60 per cent from Gauteng, 30 per cent from KwaZulu-Natal, and the remainder regional and international (mostly returning expats). The resident-owner percentage there has risen from 30 to 50 per cent, driven by the airport (Gauteng commuters). Many holiday homes are still being purchased with a view to retirement.

The holiday-home market offers a number of investment models: short-term holiday rentals (often very high); a combination of rental and self-occupier; and those who buy in the upper end, often in estates, for private use.

Increasingly, well-positioned holiday homes are considered good long-term investments for retirees, either to live in later, or to enjoy the rentals as a supplementary income before or during retirement, and/or as an appreciating asset which, when sold, funds retirement.

And just when it seems there’s no more estate land, in Umhlanga, arguably the top spot, ‘Estate development is everywhere, with prices from R4 million to in excess of R10 million,’ says Carol Reynolds, area principal: Durban Coastal for Pam Golding Properties. ‘We’re currently busy with feasibility studies on four estates.’

Myles Wakefield, CEO of Wakefields Real Estate, says realistically, ‘It’s no surprise that the holiday-home market, as non-essential property, is more sensitive to a tough economic environment than a primary residence. History shows that in rough times, a holiday home will be offloaded first and fast, often to the detriment of the investment.’

In the FNB Property Barometer, John Loos, household and property sector analyst for FNB Home Loans, describes the current South African landscape as ‘an economy teetering on the brink of recession’.

Loos notes that ‘after some resurgence, off a low base, through 2013/2014, the FNB Holiday Town House Price Index has more recently shown signs of a loss in price growth momentum’.

All signs point to an uneasy economic time ahead, but listening to the keen rustling of paper by both developers and the public after the recent release of Tongaat Hulett land in the Sibaya precinct around the little coastal holiday mecca of Umdloti, who knows…

Text: Anne Schauffer
Photographs: Supplied (Loxley Estate ZAARC)

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