Tzaneen lifestyle in demand

The second largest town in Limpopo Province, Tzaneen is the economic and trading hub of the area, providing accommodation, jobs and commodities to the more than 700 000 people who live in and around it. It's also currently one of the province's most sought-after residential destinations.

So says Pieter Human, principal of the local franchise of the Realty 1 International Property Group. According to Human, while demand for normal residential property is concentrated at entry buyer and investor level at the moment, there is also steady movement in the smallholding sector, particularly for properties smaller than 21 hectares. This is largely by people keen to swap city living and traffic noise for a more relaxed country lifestyle, he says, and by others who want weekend retreats.

Many new smallholding owners retain their city jobs, quite happy to commute further to work and back each day. Others, however, are throwing in their work towels, determined to capitalise on the area's subtropical climate and ideal agricultural conditions which have ensured its place as one the country's most prolific crop producers.

Its agricultural prowess aside, Tzaneen also offers a thriving local economy, bolstered by the relatively low interest rate which is fuelling people's buying power, says Human. This, in turn, is bringing newcomers into the area to take up jobs or start new businesses, and thereby creating additional demand for products and services.

Currently Human, who raked up a number of awards at the recent Realty 1 IPG National Awards Ceremony in Gauteng, says demand for townhouses is at an all-time high. But this demand slows dramatically when pricing goes beyond R660k, he says, adding that there is a huge gap in the market for homes priced from R400k to R550k. "Apart from the imminent launch of a new 100 unit residential development, which we will be marketing, there is very little stock in this price range, where first-time buyers and buy-to-let investors predominate."

The development, unnamed as yet, will offload a selection of bachelor, one- and two bedroom units on to the market, ranging in price from R250k to around R400k. But while compact in size, the architects have incorporated a strong design element into the development, which will set it apart from most other affordable complexes, Human says. As a result, he is expecting units to sell very quickly on launching.

Demand is also high for vacant land in and around Tzaneen, he adds, which is encouraging existing home owners to subdivide their properties. Because of the current dearth of land, selling prices are hitting record highs of around R220k for a 500sq m stand (the minimum size permitted by the local authority) and R300k for a 1300sq m plot.

From an investment perspective, Human says newly-purchased properties will, in all likelihood, have to be subsidised for the first couple of years. "Buyers are probably not going to be able to offset their entire bond repayments against the rentals they receive, because while the average purchase price of a two bedroom unit in Tzaneen is around R440k, rentals for the same unit are sticking at R2 800. This means there is going to be an initial shortfall of around R1 200 per month, excluding levies," he says.

He emphasises, however, that property remains one of the country's best medium to long term capital investments, which should now form the basis of any serious investor's thinking. While R1m plus sales have slowed, Human's recent sale of a R1,54m home shows that even prime homes remain in demand, albeit on a smaller scale than in previous years.

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