Residential Apartment Blocks the way forward for investors

The residential apartment block at 9 Wilkinson Street, Newlands, sold by the ClareMart Auction Group. The photo features sales director, Farrell Perling and auctioneer, Garth Viljoen

A six unit residential apartment block situated at 9 Wilkinson Street, Newlands are ClareMart Auction Group sales director, Farrell Perling and auctioneer, Garth Viljoen.  Sold by ClareMart Auction Group to a local investor for R4.4 million, ‘’Paul House’,’ is located adjacent to popular Dean Street and is directly next to the ‘’Spur Building’’ opposite the Newlands stadium, home of the Western Province Rugby Union.

‘’ Apartment Blocks that offer investors solid returns and development potential are selling at auction’’ says Viljoen ‘’This sale continues to illustrate that there is a strong demand for entire apartment blocks, particularly in prime locations’’ The block comprises two studio flats as well as two one bedroom apartments and two two bedroom units. The total rental income of the block amounts to approximately R290 000 per annum.

ClareMart Auction Group has seen a variety of residential apartment blocks enter the auction market and has recently also been successful in selling a fully tenanted eight unit apartment block in Bellville. The block situated at 11 Barnard Street, is situated in an established residential area and is located in close proximity to the Bellville CBD.

‘’The Bellville block was sold at last month’s Multiple Property Auction at the Mount Nelson Hotel’’ says Viljoen. “With the economic climate under duress, it appears that investors are looking toward residential investment opportunities. With apartment blocks of this calibre, investors are able to house multiple tenants and the returns they are potentially able to obtain are in many cases more attractive than other available investment options.’’

‘’Despite current recessionary trends in the markets, investment in income generating residential property seems less affected and appears to offer investors substantially better returns than in previous markets’’ adds Viljoen. ‘’Position is still a key factor in the saleability of these types of properties with a steady demand for complexes and blocks in popular suburbs, close to amenities and business districts being seen snapped up at auction. Continual growth in the form of annual escalation as well as multiple tenancies, create favourable returns on investment’’.