Breaking Ground with Cape Town student accommodation at the right price1st Oct 2018
‘Our upcoming studio units in Obs are ideal for first-time investors’ – Rawson Developers’s Brad Morgan
Smaller units geared to students and short-term renters, sold at competitive price points to first-time buyers or investors, is Rawson Developers’s winning formula that is leading the property market in Cape Town’s Southern Suburbs.
Rawson Developers’s two flagship developments in Observatory, Madison Place and The Paragon, are geared mainly to young professionals and students. Their fastest-selling units are the one-bedroom apartments (around 40–45 square metres). These were sold out at The Paragon soon after they were launched two years ago, for around R1.5 million, and are fetching rentals of approximately R10,000 to R 12,000 per month. The compact two-bedroom units at launch were priced at around R2 million, and are currently fetching rentals of about R14,000 to R 16,000. The Winchester, also in Observatory, launched last February, and all the one bedrooms under R2 million sold in the first day.
In an exclusive interview with Estate Living, Rawson Developers’s marketing director Brad Morgan said that, even in tough economic times, these developments are doing well, because the units are compact but big enough for both students and young working professionals, and are thus attracting investors who can get much better value for money here than buying property closer to Cape Town’s Atlantic seaboard.
‘In The Paragon and Madison Place, the one-bedroom units were around 45 square metres, and the two bedrooms started at 60 square metres. We are now looking to launch another development in Obs, with smaller units starting at around 30 square metres, so that we can bring units to the market at a more affordable price, and cater to buyers who previously were not able to invest in new developments,’ says Morgan.
These smaller units are a logical way forward for developers in Cape Town, he says, and they work optimally in mixed-use developments. ‘The key to these smaller units,’ he adds, ‘is to make them special inside, so that no space is wasted. People today are simplifying; they don’t need a lot of space, as long as the space is comfortable and optimally utilised, and the development has communal areas and facilities like rooftop gardens and pool areas, gyms and work spaces. These are an integral part of this relatively new concept.’
Rawson Developers uses Home from Home to manage investor units for short-term rental, which some investors make use of. ‘It’s similar to the hotel suite rental pool concept, and these units do well from a short-term rental point of view. Some clients also manage their own short-term rentals via Airbnb and similar platfoms.
‘Security and peace of mind are a priority consideration at all Rawson Developers’s buildings. We have top-of-the-line security including biometric access control, 24- hour security, electric fencing, CCTV cameras, etc., and also fibre connectivity in all our buildings,’ he adds.
Morgan anticipates a robust value growth in Rawson Developers’s offerings over the next few years. ‘Obs is close to UCT and Groote Schuur Hospital, and not far from the CBD and the Waterfront. There is not a lot of available land left in the Southern Suburbs. Ultimately, over time many of the run-down buildings between the CBD and Obs will be developed or refurbished to cater for the additional demand for accommodation near the CBD.’
Rawson Developers is busy with the constuction of The Winchester, also in Observatory. It was launched in February last year, with units priced from R1.5 million. ‘We saw the beginning of the slower capital growth in Cape Town at the time. But still, we sold those units quickly. So the capital growth in Cape Town may have tapered off, but the market is not weak, and investors should see good returns, and also be able to benefit from the tax savings that being located in the Urban Development Zone offers,’ he says.
A minimum of one parking space is available per unit at all Rawson Developers’s properties, even though the Uber movement continues to gain traction in Cape Town. ‘The Uber trend is strong, and in five to 10 years, the picture will look quite different, so transport costs may come down. We are not quite there yet,’ he adds, ‘so for now we need to provide parking.’
Rawson Developers has a few other popular developments in Cape Town, including Eighty-Two on Hatfield and Three Fountains in Kenilworth; The Premier, The Rondebosch, Rondebosch Oaks and the recently launched Rondebosch Oval in Rondebosch; and The Beaumont, near Cavendish Square