Finally! After watching it being constructed The Orangerie in Orange Street is finished! Out of the way welfare pensioners (a CPOA old age home was demolished to make way for it)! We need some shoddily built overpriced apartments.Anyway so we haven't had a Rent Vs Buy analysis in a while so why not today. Here's a 2bed/2bath apartment on the market for R2 975 000.That means on a 100% bond you will be paying R29 701/month. Or you can rent the exact same apartment for R11 750 (that's gross not net). Now to be clear I would never advocate anyone rent a 2 bed apartment for R11 000+/month but that's just what the asking rate is at the moment for this joint (and that's if they achieve it). The difference between the bond and the rental is R17 951/month meaning that after year one you'll have lost R215 000. And it gets worse, the transfer duty on this property is over R230 000, which means you could rent this place for two years and be in the exact financial position as someone who bought it, except they will have paid in over R600 000 in bond payments in that time. Will capital appreciation make up the difference in two years?
I'd just like to add a final thought here: For close to 3 bar I'd like a decent kitchen, not a 'kitchen nook' in the middle of the dining/living area or whatever name developers call it.
Here's the yield graph:
So a deposit of R1 800 000 is needed to break even on cash flow. Paying for the whole place in cash gets you 4.74% ROI and that's before levies (which won't be cheap for this place), maintenance and vacancy costs.
Anyone got more info on the Orangerie? Is it a ghost town? Let me know at capetownbubble@gmail.com
10 comments:
A lot of money for a matchbox. 121m² is not a lot of house if you consider that some of that is staircase! At the bargain price of R2,975,000-00 / 121m² = R24,587-00 /m². It must be that we simple country folk do not understand city economics. Surely 3 bar can do better than that!
ROFL
Un-Fuuuuuughckin-Bah-Lee-Va-Ble!!
Anyone retarded enough to buy this flat deserves to lose all their money.
Pity, it is a great spot and we need people to live/work in the city.
I presume the developers were caught by the financial crisis with their pants down.
But I agree: slash the price in half. There is no way The Orangerie can be successful.
3 mil will get you 1/2 an acre and 4 bedrooms and a pool in constantia. no levies you dont have control of, and a decent distance from your neighbors. what a price to pay for not having to commute
Interesting to look back to when this development was for sale off plan -
http://www.property24.com/articles/news/market-news/Affordable-projects-still-in-demand/6576
"A wide variety of buyers has also been quick to snap up apartments at The Orangerie, the new high-security development situated next to the Mount Nelson Hotel in the City Bowl. PGP has sold 82 of the 92 apartments, and the remaining 10 are priced from R2,7m for a two-bedroomed, two-bathroomed apartment with two undercover parking bays.
One wonders how well those who bought early have done i.t.o. capital appreciation.
By the way - the above link is to an article dated December 2007. It looks like the 2 bed/2 bath apartments have not done well, 2.7 bar 2007, asking 2.9 bar in 2010. Ooops.
Ja,ridiculous - utterly,utterly ridiculous.
I hope the whole joint ends up under execution.
It will serve the greedy f@#$rs well.
Excuse my french.
Interesting to note that the cost of the development was estimated at R 290 million, and with a hundred units (94 to be precise) they need to sell for on average 2.9 million each just to break even. Now we know that cost estimates are almost certainly over-run, so this thing is sailing very close to the wind.
i wanted to buy one of those flats off plan. We were not impressed by the quality of kitchen bedrooms and bathrooms. All apartments look into each other, no privacy, terribly small. Under R3M is pure robbery!. The architects did a poor job, they could have built less apartments but build them larger and with more privacy. The position is ideal.
Ive seen every apartment for sale in the city bowl, and as far as value for money, you wont get better than this. Location, location and location. I love it
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