Ten years ago, a desirable lifestyle would probably have been to own a modest house in the suburbs with a pretty garden, located a decent distance from the city for work. Today’s young professionals have a completely different outlook and it’s pushing developers to think way outside of four concrete walls.
The recent mentality shift sweeping the developed world has turned the typical idea that the city is where you work and the suburbs where you live completely on its head. Coupled with this is the growing trend of apartments as opposed to houses, and South Africa looks to be following suit on both fronts.
The regeneration and revitalisation of urban areas in South Africa have helped to attract a steady stream of young professionals and working families out of the ’burbs and into the city. Not only are they now closer to work and enjoying easier access to cafés, eateries, gyms and food stores that usually stay open until later than normal, but in the case of Cape Town there is the added beauty of having Table Mountain and the sea quite literally on their doorstep.
“The city of Cape Town works reasonably well thanks to organisations like The Central City Improvement District (CCID), who have ensured greater security and a cleaner environment,” says David Cohen, Managing Director at Signatura.
The company, which was launched in Cape Town in 2012 by property pioneer John Rabie of the highly successful Rabie Property Group, is centred on offering high-end properties that are strategically located in desirable areas of the city and are at the forefront of this dramatic change in living options.
As Cohen explains, cities offer a great living alternative for families and the older community, and a great opportunity for developers thanks primarily to the changing of the rezoning scheme in 2013. In comparison to many First World cities, like London for example, the zoning scheme in Cape Town was not pro developer but rather pro stability, and set out very clear and workable ground rules and gave clarity to the industry that already had enough risk.
“The only hindrance in Cape Town specifically is the shortage of schools within the CBD, but as time goes by, this is likely to change too,” says Cohen.
Cape Town CBD is relatively small and being small has its advantages. Living in the city means less driving, less pollution and being closer to essential services like the newly built Netcare hospital. Being small also means that Cape Town offers an unique opportunity to live on the boundaries of the city, in areas like Fresnaye for example, yet still own and live in a larger-than-usual home with plenty of green space. Anywhere else in the world, only a plush apartment would be a possibility, with little or no greenery.
A lot of Rabie’s vision and drive has been drawn from outside of South Arica. Before launching Signatura, he visited Tel Aviv, Israel, and was particularly impressed with the local urban regeneration structures. Just like Cape Town, space is at a premium in Israel and developers tend to build upwards rather than outwards, and Rabie felt this international trend could be brought back into Cape Town.
Starting in Vredehoek with conversions, Horizons was their first full development and consisted of a five-apartment block that was once a stand-alone house. Ideally, developers want to have as many tools as they needed to sell a home at their disposal – be it a combination of location, view or lifestyle. At Horizons, Signatura could combine all three, with each unit having state-of-the-art finishes, sweeping vistas across the Atlantic Seaboard, and offering a leisurely lifestyle with every convenience of the city within easy reach.
The formula worked well, with Rabie and his team copying the Horizons method for their second and third schemes. The successful combination is also why the brand has several long-standing and repeat investors and buyers who see the value of owning property in high-density areas, which will get even more dense as time goes by.
“Our market is mainly investors who rent out their properties within the city through developments like Radisson Blu,” says Cohen. At Radisson Blu, Signatura restored what was known as the Safmarine House, one of Cape Town’s iconic buildings, for residential use in the form of a five-star hotel and 167 sectional title apartments and penthouses.
The majority of Signatura investors are not flippant, choosing instead long-term tenancies that can yield between R 12 000 and R 15 000 per month for a studio apartment. Investors can expect an average annual yield of between 4% and 6% on rental income and 8–10% on a capital appreciation basis.
On the buying side, there is a huge misconception that the Cape Town luxury property market is owned and invested by foreigners, but that is simply not the case. A large proportion of permanent buyers make up the rest of the market for Signatura, especially for their penthouses. They are mainly local South Africans and pretty much all are from Cape Town, buying and investing in their own city.
“There is a lot of opportunity here and we only see a select few foreign buyers or investors,” says Cohen, which is why the developer does not intend to move outside of Cape Town, or the CBD for that matter. Instead, Cohen and his team are focused on catering for all that come their way.
They have chosen the unique position of not engaging the services of external real estate agents. Instead, their in-house sales team manage the entire sales process with the assistance of Machete Creative, they direct how their brand is conveyed and maintain the pulse of this ever-changing market. An additional rental arm is also available, overseeing the finding and managing of tenants for those investors who have already bought into the development.
Several different models are also on the table to make the product portfolio more accessible to a wider market, but the problem for most other developers is the availability of land.
“A smaller area also has its disadvantages. Less land means more expensive. The city is not so big, and land and construction are the two factors that cost the most, and we do not foresee this changing,” says Cohen.
One of the best ways to limit the high costs is to sell off plan, but it comes at a risk. Anything can go wrong in the few months or years until completion (strikes, inflation – to name but a couple), yet developers like Signatura take that risk so that they can offer clients a property that, on day one, is worth more than when they made the offer.
The other option is to adjust their formulae. At the Onyx development, a dramatic repurposing of the city’s iconic Nedbank Building, Signatura chose to retain and run serviced apartments on two floors. These fully serviced apartments are not only the perfect corporate suites with a leisure component attached, but also offer what is commonly known as medical hospitality, which is another major trend taking over other parts of the world and provides ideal accommodation for family visiting patients in the nearby hospital.
Signatura has several new projects on the drawing board, one of which is an entirely new living concept focusing on co-living in communal spaces.
“This is a trend that’s happening around the world and it fits very nicely with the Signatura model as we are location centred,” says Cohen. “People are willing to sacrifice space for location by getting rid of superfluous things. If we are smart, there should be no difference between a 45m² and a 28m² apartment.” Different, experimental or downright provocative – whatever you call it, it is obvious that Signatura is pushing boundaries when it comes to how we live, and that must be commended.
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