Interestingly, the bulk of the bidders were private, black investors who bought the township houses mostly for buy-to-let purposes or to fix-up and sell-on for a profit. Prices fetched for the one, two and three-bedroom properties ranged roughly between R30k and R200k. That saw the auctioneers, the Alliance Group, net a total of R65m during the one-day property sale.
Shaie Zindel, head of the Alliance Group's northern region, says he expected large, institutional buyers to snap up most of the properties. Instead, individual black buyers emerged as the most aggressive bidders.
Zindel says it's the first time that the Alliance Group has seen black buyers enter the property investment game on such a noticeable scale. "Clearly, the seven consecutive interest rate hikes since mid-2006 and the introduction of stricter lending criteria through the National Credit Act (NCA) haven't scared these investors off."
David Wentzel, CEO of AltX-listed affordable housing developer RBA, recently echoed a similar sentiment, saying that townships and surrounds are increasingly being viewed as attractive investment destinations. A year ago, RBA would not have sold a single affordable housing unit for buy-to-let purposes. Currently, up to 10% of RBA's stock is going to investors.
FNB property strategist John Loos confirms the trend. He says buy-to-let investors are no doubt starting to target townships, as these areas offer the potential for far better returns over the next few years than traditional white suburbs. Loos believes the advent of shopping centres and other infrastructure development has helped turn townships into more desirable areas in which to own property.
The Alliance Group's township auction sold lots consisting of three or four houses. Most of the properties are located in the Gauteng townships of Alexandra, Soweto, Thokoza, Kagiso, Vosloorus, Daveyton, Etwatwa, Kathlehong and Mamelodi as well as the Free State townships of Zamdela, Kutlawanong and Thabong. - Joan Muller
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