Lew Geffen Atlantic Seaboard Dust Up

Trust me being out the country when some truly juicy stuff starts going down. It seems Lew Geffen is getting into some dirty dealings with his Atlantic Seaboard franchisees. Reader KS sent me a link to a blog covering all the news: Lew Geffen Sothebys Scandals.

Ballinrobe: Take The Fork Out! It's Back!

Much maligned (at least here) development The Ballinrobe in Sea Point seems to be back in action after construction stopped because they violated height restrictions. Sea Point reporter JP writes:

Drove past The Ballinrobe the other day and looks like building is back on. Guess the developers managed enough snot and trane to get City Council to retroactively approve their height restrictions.

This place was supposed to be finised over a year ago and now it looks like they're going to miss t he world cup tourists!

JP also sent a link to an ad from Ballinrobe on Gumtree. Read it and smell the desperation:

The developers are willing to combine Unit 103 and Unit 104 or Unit 104 & Unit 105 – Only possible with a full commitment from YOU!

Ballinrobe: Why The Pawpaw Hit The Fan

Seems the developers decided to ignore height restrictions right before the Cape Town City Council decided to start cracking down on such offenders. Here's a comment from a previous thread:

So the developers are Irish and if they finish the building the top floor will contravene their zoning height restriction.

They started building the building too high.

Am pretty sure that the top floor is where all the cream is, so they are faced with some tough decisions...

Balllinrobe: Stick A Fork In It... It's Done

Regular Sea Point reader PJ writes:

Construction on the Ballinrobe on High Level Rd looks to have stalled. The site is locked up and trash is piling up behind the gate. Stick a fork in it... it's done. It's now just a giant hulking concrete jumble of boxes visually stinking up High Level Rd.

Rent Vs Buy: Green Point - R1.17m = 0% return

Here's a 2 bed apartment in Green Point on the market for R1 900 000 which attains a monthly gross rental of R7 200. The flat is 62m^2 so R1 900 000 means the cost per m^2 is over R30 000/m^2 so this is in no way a value for money buy.

With a 100% bond the monthly payments are currently R18969/month which means the difference between that and the rental is R-11769 which is over 160% of the gross rental itself!

The bond costs alone are R139 000 which is over 18 months (one and a half years) of rent. Subtract rates/levies, maintenance and vacancy costs and the net rental income is probably closer to R6000 if not lower. Here's the yield graph:



To break even on cashflow with the gross rental requires a deposit of just over 62% of R1.17 million. Even with a 50% deposit you need capital appreciation of 1.44% to not lose any money. Paying for the entire property in cash nets you a return on investment of 4.55%. I think there are transaction accounts out there paying equivalent interest than that.

This block looked familiar and so I went diving off into the archives and found that in January 2008 the rental for a 2 bed apartment in this block was R7 000. In Jan 2010 it's R7 200. That's an annual rental increase of 2.8%, well below inflation. However the asking price in 2008 was only R1 250 000. Me thinks someone needs to sell at R1.9m to avoid losing any money (and hopefully make a profit) from paying in to cover the bond for the past few years. Specuvesting at it's finest.

Saturday Open Thread - The Great Real Estate Agent Cull

Sea Point reporter JP wrote in

Noticed today 3 estate agencies are now empty - Anne Porter, ERA and Chas Everitt. Not sure if they closed for good or moved to smaller offices..

What's the status of the Great Real Estate Cull in your area?

Atlantic Seaboard Hits The Wall

Atlantic Seaboard struggling

The swanky Atlantic Seaboard, which until recently appeared to be reasonably immune to the overall housing slump, is now also being hit by negative sentiment.

New data from Seeff Properties' Atlantic Seaboard office show that sales of sectional title apartments in Fresnaye, Sea Point and Bantry Bay have halved from January to October 2008 (y-o-y).

Seeff sales specialist Adrian Mauerberger says in 2007 around six apartments were sold every month in this area in the price range R2m plus. Atlantic Seaboard apartment sales are now down to an average three per month.

More worrying is the large number of units coming on to the market. According to Mauerberger's statistics, some 117 sectional title apartments are currently for sale on the Atlantic Seaboard. He says given that only three units are selling every month it would take 40 months (or more than three years) to sell all of this stock. "That's assuming that not one further listing comes on to the market.'

Thanks to reader TA for the link!