New property trend taking over Cape Town

More than 50% of the properties sold in most areas of Cape Town are now sectional title, as the Mother City’s property prices continue to rise.

Lew Geffen Sotheby’s International Realty’s Brent Townes recently explained that the demand for sectional title properties has been driven by soaring property prices in Cape Town.

Cape Town is Africa’s most expensive city for real estate, as prices in the city have skyrocketed over the past few years.

Lightstone data recently revealed that Cape Town’s property market is outperforming Joburg’s in terms of both sales price and volume. 

In 2024, the value of property sales in Cape Town was just over R81 billion, up from nearly R74 billion in 2021, while in Johannesburg, it fell to just over R47 billion from R59 billion in 2021.

Despite these high prices, Townes said there are still excellent investments to be made in the city, especially in the sectional title sector.

He said 40% of sectional title purchasers are first-time buyers looking to get a foot on the ladder of Cape Town’s buoyant property market.

A sectional title is a form of property ownership where individuals own a specific portion or ‘section’ of a larger property or development, along with a share in the common property.

The alternative to a sectional title is freehold ownership, whereby the homeowner owns the property in its entirety.

Townes said Cape Town’s Southern Suburbs are one of the most sought-after regions for sectional title properties.

This is because the area offers many compelling drawcards, including proximity to good schools and the university, a vibrant commercial component and an excellent lifestyle. This has seen house prices in the region increase “exponentially”.

“However, for those looking for more accessible pricing or lock-up-and-go convenience, there’s a multitude of sectional title options, especially in Observatory, Salt River, Claremont, Wynberg and Wynberg Upper, Rondebosch and Plumstead,” he said.

Property prices in these areas average R2,250,000, although sectional title prices range between R800,000 and R1.3 million.

“Thanks to rampant development in recent years, which has seen the number of sectional title properties soar, coupled with rising freehold prices and lifestyle choices, more than 50% of the properties sold are now sectional title with options to suit all budgets and lifestyle needs,” he said.

Property investors

Townes added that there is also strong demand for sectional title properties in Cape Town from investment buyers.

These buyers tend to either buy for their children attending university, for third-party tenants in the rental sector, and also for the purposes of having a diversified investment outside of their current metro where they reside.

“Vacancy rates have for the past three years been below 1% in our managed residential property portfolio, so there is no shortage of quality tenants, thus supporting the return on investment,” he said.

According to Townes, many buyers have specific wish lists when it comes to sectional title property. 

The most common are secure parking, above-ground floor, two-bedroom units, and amenities like private pools, which all signal that buyers value comfort, security, and lifestyle perks. 

A strong trend is pet-friendly schemes – usually for people with a cat or a small dog – subject to Body Corporate approval.

“While many buyers enter the market with optimism, understanding the full cost of homeownership and purchasing a sectional title home is essential,” he said.

“While the purchase price is certainly the largest expense, additional costs can quickly add up, and they aren’t always factored in when buyers set their budgets.”

To illustrate this, Townes outlined some of the often overlooked costs associated with sectional title properties.

Assuming that the average apartment price is R2,250,000, the following costs can cause significant financial strain if not budgeted for – 

• Bond Costs: R52,603
• Transfer Costs: R97,634
• Moving Costs: Variable (R10,000+ estimated)
• Deposit for Utilities: Variable (R2,000+)
• Fibre/Wi-Fi Installation: R1,500 to R5,000 (plus monthly costs)
• Homeowners Insurance: R500 to R2,500 per month
• School Registration and Uniforms: R5,000+

“This means that, beyond the purchase price, buyers should budget for at least R200,000 to R250,000 in additional upfront costs,” he said.

“And another cost that is often not given enough consideration is the monthly levy that all sectional title owners pay to the Body Corporate, which covers the management of the complex and includes factors like maintenance and security.”

While levies can vary significantly, depending on what facilities are offered, Townes warned that they will usually be much higher if there are amenities such as pools and gyms or if security includes manned entrances.