The mixed-use precinct boom is being experienced in economic hubs and principal cities around the world, with much growth in this sector being attributed to shifts in buyer sentiment towards value and affordability.
With further tepid growth forecast for 2020, personal and household finances for the majority of South Africans are likely to remain under pressure for a considerable time yet. According to the 2019 Deloitte Global Millennial Survey, 67% of millennials in South Africa have an ambition to buy a home of their own. Figures released by property information providers, Lightstone Property, indicate that millennials face paying up to three times more on their first home than those of Generation X, owing to significant increases in living costs and inflation over the past two decades. This, coupled with unpredictable global and local economics, as well as rising unemployment figures have made it difficult for millennials to get a foot on the property ladder.
However, those who take a holistic approach to their finances when hunting for property are gravitating towards homes in mixed-use precincts, particularly in Johannesburg and Cape Town. Affordability, value and cost-saving measures in terms of utilities, maintenance and transport are proving to be top of mind for most buyers, particularly those within the millennial generation.
The Amdec Group’s Harbour Arch development, currently under construction in Cape Town, has seen 90% of its 432 residential units sold already, equating to R1.3 billion in sales. Nicholas Stopforth, Director of Amdec Property Developments, believes that cost-conscious millennials are becoming more discerning about where they choose to invest, in terms of location, overheads, amenities and lifestyle offerings. “The millennial generation is renowned for being risk averse, so they’re more likely to steer clear of pre-owned properties that typically carry the ‘Voetstoots’ clause.”
“Millennials recognise the false economy of buying homes in affordable suburbs away from the city, as their personal budgets are consumed by additional travel, maintenance and security costs,” says Stopforth.
“Savvy buyers and investors are increasingly aware that a higher initial outlay is quickly offset against savings in fuel and utility costs over time. New urban precincts are not only appealing to millennials, whose sensibilities tend to lean towards ‘sharing’ economies, but also to more affluent homeowners looking to downsize to smaller shared environments with superior amenities within walking distances of their homes.”
“Living within a pedestrianized live-work-play precinct, where all your needs are met within walking distance of your home, along with the benefits of a safe and secure, connected and sociable, lock up and go lifestyle presents a compelling value proposition that more and more South Africans are waking up to,” he said.
Despite concerns among analysts that 2020 is set to be a challenging year for the property sector, owing to a sluggish economy, load shedding and muted foreign investment, most agree that the 2019 trend of investing in smaller homes in secure, walkable, convenient mixed-use precincts is set to continue into the foreseeable future.