Exploring the Latest Trends in the KwaZulu-Natal Property Market and Economy
Category News
The real estate landscape on the KZN North Coast has seen significant growth over the last 10 years, driven by massive investment largely from the private sector as investors have looked to take advantage of the relatively low interest rate environment that South Africa has been experiencing. This has changed in the last 18 to 24 months as the SARB has stepped into curb inflation with higher interest rates, placing pressure on the both the residential and commercial property market.
However as property professionals we have noticed some green shoots starting to emerge as the economy in general has started to pull out of the high inflation environment. In this blog post we'll dive into a few of these micro and macro trends with a view to uncovering some opportunities in our market.
- Urbanization and Demand for Commercial, Industrial and Retail Developments:
As a relatively new growth region, urbanization remains a significant driver of the KZN property market. With urban areas around Ballito, Salt Rock and Umhlali continuously expanding and attracting residents, as well as the massive boom in private gated estates, the demand for new commercial, industrial and retail space is on the rise. We have seen an uptick in the development of commercial and industrial real estate as previously undeveloped parcels of land are being opened up for development.
The relatively low entry price point, and proliferation of good quality construction and professional services teams has created an environment of opportunity for the discerning developer.
- Sustainability and Green Initiatives:
The global shift towards sustainability has influenced the property market on the North Coast as well. Buyers are increasingly looking for eco-friendly features, energy-efficient homes, and green spaces.
Property developers are responding by incorporating sustainable design practices, solar panels, rainwater harvesting systems, and more, aligning with the growing environmental consciousness of both buyers and regulators.
Estates like Elaleni and Zululami/Seaton have been very sustainability-focussed and the results are being seen in the string demand for their properties. The value upside for buyers is huge, as energy-independence becomes more and more of a hot commodity in the property market.
- Rise of the Suburban Lifestyle:
The past few years have seen a growing interest in suburban living. Many individuals are seeking larger homes with more outdoor space, driven by remote work opportunities and the desire for a quieter lifestyle. The North Coast's estates offer a compelling mix of security, world class amenities and natural beauty at a range of price points making them an attractive choice for families looking to make the most of a coastal lifestyle.
New estates like Lalela offer great entry point options for the young family, while established offerings such as Dunkirk and Simbithi continue to command excellent value for owners.
- Tourism and Short-Term Rentals:
The North Coast's stunning landscapes and proximity both to nature and commercial and retail centres make it a popular tourist destination. This has led to a growth in the short-term rental market, where property owners are capitalizing on the demand for vacation rentals. With many estates now open to short-term rentals, there has been an increased interest in investors looking to generate the attractive returns available through short-term rentals.
- Economic Recovery and Property Investment:
The global pandemic and it's knock on effects on the global economy have certainly impacted the property market in South Africa in general. As interest rates have risen, we have seen a tightening on the residential housing market as buyers elect to keep powder dry.
This tide however does appear to be turning as latest economic indicators see inflation at its lowest point in two years. The next indicator to watch will be how the SARB approaches interest rates in the coming 6 to 12 months. After the last monetary policy committee meeting voted to keep interest rates flat, we expect this to be the position for the September meeting with a possible reduction in interest rates coming in the first quarter of 2024. This seems to be the position of the financial institutions, with medium term fixed rates currently pricing below prime.
If this is the case, we can expect increased activity in the residential market as bond affordability starts to improve, allowing more homeowners to enter the arena.
- Infrastructure Development:
Infrastructure projects, such as transportation improvements and new commercial centres, have a substantial impact on property values. We have seen a plethora of both public and private investment in infrastructure, not only on the North Coast but also KZN in general.
The Junction shopping centre in Ballito is set to receive a R120 million facelift in the final quarter of 2023 as the mall owners seek to take advantage of the growing demand for retail on the North Coast. In the broader province, construction has begun on Westown Square shopping mall which is part of the much larger, R30 billion Shongweni Urban Development project.
All of this large scale investment highlights the confidence that developers and financers have in KZN as they seek to find appealing returns on their capital invesments.
In conclusion, the North Coast property market reflects the broader region's economic landscape, and staying attuned to the latest trends is crucial for making informed decisions. Whether you're a buyer, seller, or investor, understanding these trends can help you navigate the market effectively and capitalize on emerging opportunities.
From sustainable designs to urbanization shifts, the North Coast property market is a dynamic arena with plenty to offer to those who are willing to explore and adapt. Home Ground Real Estate has deep roots in both the residential and commercial property sectors on the North Coast. From first time buyers to experienced property investors, our team has the requisite skills to assist you in making the most of the opportunities afforded by the KZN North Coast.
This article has been compiled for general interest and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your property practitioner for specific and detailed advice. Errors and omissions excepted (E&OE)
Author: Murray Beattie