A Snapshot of South Africa - Plettenberg Bay

Plettenberg Bay is a town situated in the Western Cape Province of South Africa, surrounded by wonderful white sandy beaches. As such, it’s always attracted thousands of holiday tourists and property buyers, who come for the great climate, excellent food, and water sports. Whale and dolphin watching are also common in the area.

Last year, the combined effect of all this was an increase in property prices of nearly 25%, with the total value of property sold increasing by 6.4% to R830 million (South Africa Rand). However, there have also been indicators which would support the view that the market is starting to suffer, as the number of properties sold in the region declined from 511 to 414, with the number of freehold properties sold, down by 9%.

So what does this tell us? Well, the drop in the number of sales is attributable to decreasing affordability, uncertainty in the marketplace and the economy in general. The current average price for freehold property is R2.12 million. That’s an increase of 24%. The entry levels remain the same as last year at R1.4 million for houses, the mid-market at R5 million and the high end at R20 million. The highest price achieved in 2007 was R25 million for a vacant 7,000m² beachfront property on Robberg Beach sold by Hein Pretorius, the principal of Lew Geffen Sotheby’s International Realty Plettenberg Bay.

In the rural area surrounding Plett (the more common name for Plettenberg Bay) 72 farms sold for a sum of R300 million, which was substantially higher than expected.

Generally though, 2008 has been a tough year for property in the region, but with interest rates stabilising, agencies have noticed a substantial increase in enquiries. As with any market, there are cycles. South Africa has gone through a number of downturns in the recent past, only to recover and exceed expectations afterwards. 

My advice is that if you can afford not to sell your properties, then don’t. However, should you be in a position where you really need to sell, make sure your property is correctly priced, because there is a surplus of over-priced property on the market, and yours needs to stand out from the crowd. If you are unsure about a realistic price, get a valuation from a professional valuer or a reputable agent.

All investors try to time the bottom of the market to maximise profits, but it is a notoriously difficult and unpredictable task. What is certain is that the market is currently in a downturn, but it will eventually improve. Now is the time to buy realistically priced property; there are bargains available everywhere. There’s an old adage: “Buy property; they’re not making the stuff anymore.”  In general, Plettenberg Bay’s property market is still one of the top performers in South Africa. Over the past five years, prices have grown yearly at 21%, which is about double the national average. Forget New Zealand and Australia, Plett is the place to emigrate to.

This report was compiled with information from Steven Neufeld of Lew Geffen Sotheby’s International Realty Plettenberg Bay.