18 Sep Sandton apartment developments add up
The Capital on the Park, located near Sandton’s Mushroom Park, has 240-apartments on offer.
Despite mounting concerns of congestion in Sandton CBD, a number of apartment developments are springing up to dominate Sandton skyline.
This follows five years of zero developments in the area after the global financial crisis.
Now developers are willing to bet on Sandton as the ongoing relocation of corporates into Africa’s richest square mile is creating an insatiable demand for residential space.
Figures from real estate company Jones Lang LaSalle South Africa (JLL) suggest that Sandton’s current office supply amounts to 1.5 million square metres. After the completion of all current construction, JLL notes that Sandton’s office supply will increase to 1.9 million square metres over the next four years.
Discovery, Webber Wentzel and Old Mutual Emerging Markets are some of the corporates expected to set up offices by 2016 and 2017.
Industry players say the demand for apartments in the area is also fuelled by a new breed of buyers looking to live close to where they work and do business. The latest development is by the Capital Hotel Group, whereby a 240-apartment block called The Capital on the Park is in the pipeline.
Apartments are already sold out, and the development is only expected to be completed around 2017. MD Marc Wachsberger says this is indicative of the demand in the area.
“There is a fundamental shortage in residential and apartments in Sandton. With all the commercial office blocks coming up, where are those people going to stay?” Wachsberger asks.
On offer at The Capital on the Park, located near Sandton’s Mushroom Park, are one- and two- bedroom apartments ranging from R36 000 to R44 000 per square metre. “These are competitive rates because the units at The Capital on the Park are smaller than what is offered in Sandton.” Apartments in Sandton upon delivery fetch an average rate of R40 000 per square metre.
Studio and one-bedroom apartments start from R1.5 million and R1.6 million respectively. Two bedrooms on offer start from R2.8 million. About seven one- and two-bedroom penthouses also feature in the development, which has a R6.5 million price tag.
The sale of apartments is based on a purchase-to-lease-back model, meaning buyers can purchase an apartment for investment purposes and lease it back to the Capital Hotel Group. The group becomes a tenant for the duration of three years and can be renewed for up to nine years. Rentals can fetch up to R23 000 per month, with escalations of 6% every year.
“If we run good occupancy and leasing then that’s where we will make our money unlike most developers who make their money on the development and sale of the unit,” says Wachsberger. The group is also responsible for the maintenance of the apartments and offers hotel amenities and services for every apartment such as valet parking, gym, jacuzzis and more.
Beyond the investment approach, there is an option to buying an apartment unit for primary or secondary residence use. Wachsberger says the DaVinci Hotel and Suites on Nelson Mandela Square is the only other offering that has a mix of hotel and apartment living.
More developers are pouring billions into ongoing apartment developments.
Near the World Trade Centre on West Road South and Lower Road, Lushaka Investments launched a mixed-use development called Central Square. Apartments at Central Square are selling for up to R50 000 per square metre. Renprop is part of a development called 101 On The Park, a 15-storey building with 240 apartments on Katherine Street selling from R1.5 million.
Another two luxury apartment developments are selling off-plan: Metropolis on Park and Embassy Towers, with basic apartments selling for up to R6 million.