Bullish attitude is scarce among property investors. Globally, we seem to be in a period of sluggish growth and low returns, so is anywhere a good buy? In the first of a new series, we dig around in those locations that still have a bit of buzz about them and try to find out whether they deserve it.
Woodstock is a suburb of Cape Town between Devil’s Peak and the docks of Table Bay. It used to be a fishing village called Papendorp, then it was called New Brighton for a time, but the name didn’t stick. Since 1867, it’s been Woodstock.
During apartheid, Woodstock escaped the large-scale segregation that took place in neighbouring suburbs such as District Six, where thousands of families were evicted and their homes demolished.
By the late 1990s, Woodstock was looking pretty rundown. Areas such as Gympie Street became associated with prostitution and drug-related crime. So why are investors getting excited about it?
Because then came the hipsters, says Anne Porter at Knight Frank. Investment and redevelopment of former industrial spaces brought in younger creative types who took advantage of the relatively low property costs. Today, the unofficial hipster HQ is the Old Biscuit Mill on Albert Road, which has been home to a popular Saturday market since 2006.
Gentrification has helped house prices in Woodstock to rocket in recent years, much to the consternation of some locals. First National Bank calculates that, in the city’s near-eastern suburbs, which include Woodstock, values have risen 92.6 per cent in five years.
Yet local agents still tip Woodstock for growth. Partly this is because, relatively speaking, Woodstock is still very cheap — as low as R1,050 per square foot (about $80), according to Porter. Partly it is because other areas of Cape Town have risen even more sharply. Homes on the Atlantic seaboard have risen more than 143 per cent since 2012, according to FNB. And partly because Woodstock is the last remaining inner-city area available for redevelopment and benefits under the Urban Development Tax Incentive scheme.
The incentives can be applied to the cost of erecting, extending or improving an entire building, or part of a building measuring more than 1,000 sq m, or to the purchase of a building directly from a developer, provided that certain requirements are met. “It has proved popular with investors,” says Porter. “The allowance results in a reduction in taxable income and can also create an assessed loss, which can be carried forward against future taxable income.”
It’s not all good news for investors, though. While house prices have exploded in Woodstock in the past 15 years — up around 569 per cent, according to FNB — growth seems to be slowing. In Q2 2017, year-on-year growth in the near-eastern suburbs stood at 14.7 per cent, which, admittedly, is still very strong. But it is a considerable slowdown from the 18.4 per cent year-on-year growth posted in Q3 2016.
Not all of Woodstock is gentrified, and certain pockets can still look and feel shabby. Crime in Cape Town is also a consideration. The city has a murder rate of 60.77 per 100,000, which is higher than Johannesburg and Ciudad Juarez in Mexico, both former contenders for “murder capital of the world”.
For Porter and many of the people who live in Woodstock crime is not such a big deal locally. “Petty, opportunistic crime occasionally occurs,” she says, “but this is a universal issue.”
These days, Porter points to the residential area of Upper Woodstock (between Main Road and Nelson Mandela Boulevard) as being particularly sought after. “Many of these Victorian properties have retained their original character,” she says, “and some, such as those on Balfour, Chamberlain and Salisbury Streets have excellent harbour or mountain views.”
Photographs: Nasief Manie/Foto24/Gallo Images/Getty Images; M Sobreira/Alamy; Jeff Greenberg/Alamy