Developers bank on SA’s millennials buying swanky apartments

Developers are betting on an economic recovery that will see middle-class millennials rent or buy newly built apartments, which will be completed in two to three years’ time.

Earlier in June, Attacq launched The Mix in the Waterfall node in Midrand, while property developer Abland launched The Rubik in Cape Town, with both offering small and micro units, as renters favour lifestyle and amenities in the precincts over large living areas.

Attacq, a listed developer and landlord, has spent the past three years planning and developing residential assets that will be added to the Waterfall node in Midrand, one of the fastest growing multi-use nodes in the country.

The company, which owns 80% of Mall of Africa, the largest shopping centre built in a single phase, will bring at least 400 apartments to The Mix, a R500m project located next to the super-regional shopping centre.

The 14-storey project will be co-developed by Cape Town-based company DTE Properties.

“We are excited about bringing these designer apartments to Waterfall, offering residents access to the lifestyle and amenities which the node offers at a very attractive price relative to others in the market,” Attacq chief development officer Giles Pendleton says.

In SA, the millennial generation includes those people born between 1980 and 1999. These people are now in their twenties and thirties and are in, or set to enter, the residential property market within the next five years.

Interest rates are at their lowest level in about 50 years and market commentators expect them to remain low for a couple more years. This will encourage people including those in their late 20s and early 30s to enter the property market for the first time.

Founded in 2005 and listed on the JSE in 2013, Attacq has been investing in Waterfall for about a decade. CEO  Jackie van Niekerk said in a recent presentation to shareholders and the media that Attacq is set to roll out one-million square metres of multi-use and specialised developments over the next five to 10 years which would expand its asset base by about R20bn. 

The company already owns about R20bn worth of SA assets, about half of which are in Waterfall by rand value. 

Pendleton said the Waterfall node includes Mall of Africa as well as offices and other retail and industrial assets in a section of developments called Waterfall City. By designing The Mix, the  company would be able to attract “a younger buyer”.  

“We are very serious about the future of Waterfall. Over the past few years it has become the leading node in Gauteng. It boasts our flagship Mall of Africa  as well as Waterfall City, which has attracted top tier tenants including PwC, Novartis and Deloitte Africa. It has been a logical step to add on impressive residential sections,” he says.

“We expect The Mix to sell out in the next six months. It will be a place of choice for rentals by young professionals when it is complete,” he says.

Meanwhile, national developer Abland, which has historically mostly built retail centres and offices, is also recognising the potential of residential assets geared towards young professionals.

Abland and its partners Giflo have invested R500m in a luxury mixed-use development, called The Rubik, in Cape Town’s CBD.

Abland’s marketing director Grant Silverman says construction has begun, with sales on the project having already met commencement targets.

“This is the third high-rise we have done in Cape Town. We believe that young professionals will be attracted to The Rubik because it has that lock up and go aspect and is in proximity to banks and courts,” Silverman says.    

The building is a conversion from a building which had previously only offered three storeys of retail space and which is now being redesigned to attract millennials to the CBD, through offering 79 residential sectional title apartments.

The Rubik will offer its sectional title apartment owners a choice between 46 one-bedroom, one bathroom units, 24 two-bedroom, two bathroom units, and nine two- and three-bedroom duplex and triplex penthouse units, with purchase prices starting at R2.15m.

Data analysts Lightstone Property say sectional title properties are also especially popular among first time buyers.

“Younger home buyers, usually under 35 years, opt to buy sectional title because of improved safety, affordability and the convenience of a lock-up-and-go residence,” says Hayley Ivins-Downes, head of digital at Lightstone.

Estate and sectional title stock in Gauteng’s most affluent commercial node, Sandton have soared since 1994.

Sectional titles accounted for 41% of newly developed properties over the past 27 years and the majority were released in Paulshof. 

andersona@businesslive.co.za