The Future of Home Buying
Due to rapid urbanisation, technological advances, awareness of the need for more sustainable living and the scarcity of property close to economic centres, the suburban dream no longer makes sense.
Along with global economic realities, the new generation of investors, the so-called millennials, simply want different things from life than their parents did – their idea of home is more fluid than the “forever” connotation it has traditionally had.
“Millennials tend to have less secure jobs,” says property research and market analyst Sandra Gordon. “Many young people have student debts and delay having children and getting married – so they are happy to live in an apartment in a vibrant live-work-play area rather than owning a large freehold suburban home.”
“I believe the philosophy behind any property investment these days is to do what works for you right now,” says Carola Koblitz, communications manager of the Cape Town Central City Improvement District (CCID). “Our lives change so quickly that what you need today may be very different to your needs in a decade. What lifestyle do you want right now? In the past, many property owners invested with a long-term vision for the future: a home where in a few years’ time they could raise a family or one day retire in.”
Today, we see a move to urban living and a change in mindset and lifestyle much like property owners in big cities abroad have done for decades: big city, small living space (and sometimes even a very small space). “It is indeed the only way that future development in an area like the Cape Town city centre can really be successful, and still be profitable for astute and responsible developers on the one hand while being affordable for buyers or rental tenants on the other,” says Carola. “We are now turning into a market where demand needs to dictate and supply needs to follow.”
Sandra says because of affordability, some first-time buyers who cannot afford a home in an area where they’d like to live opt to buy a property to rent out to someone else while they remain in a rental property of their choice. These “rentvestors” see this as a first step on the property ladder.
UPCYCLING AND REPURPOSING
Space efficiency is becoming key and there is a premium on space, specifically if it’s well located. Urban populations are overtaking non-urbanised communities, and the need for inner-city residential property is growing. Deon van Zyl says South African cities were historically characterised by a colonial urban form and later structured to separate groups of people. The political agenda meant that city planning did not reflect space efficiency.
African cities are experiencing challenges, but these come with opportunities, says Jonathan Liebmann, founder and CEO of the Johannesburg-based Propertuity. “Industrial areas close to prime CBD zones are becoming residential areas and the value of these neighbourhoods increases significantly, as they lend themselves to this change of use. Micro-living is going to be next wave of residential lifestyle in urban centres in response to the lack of affordability for middle-income residents wanting to live to close to where they work.
Jonathan is an example of a millennial entrepreneur who brings together global collaborators using technology, design and architecture to repurpose underutilised and industrial buildings in forgotten or non-functioning city spaces. His ambition is to create cohesive communities and neighbourhoods, and not just upgrade buildings. Jonathan is known for the development of Maboneng in the heart of Johannesburg. He is expanding his vision for connected cities led by design and community into other centres like Pretoria and Durban.
Drivelines Studios, one of Propertuity’s most recent developments, is a multi-storey apartment block made entirely out of shipping containers. Developed over an existing single-storey structure that was previously a car-repair shop, thismixed-use development aims to provide affordable housing for Johannesburg’s growing inner-city residential market. The development was designed by LOT-EK, an award-winning architectural design studio based in New York.
The global phenomenon of rejuvenating industrial areas started in the early eighties with the urban redevelopment of the London Docklands, which transformed a dying industrial area into one of the most thriving financial hubs in the world. A similar revival was seen more than two decades ago with the fashionable redevelopment of industrial buildings in the Meatpacking District in New York.
SHARED ECONOMY AND TRANSIENT OWNERSHIP
The new generation of millennials appear to favour experience over possessions, and in part this can be attributed to a backlash against consumerism. The desire to work remotely instead of being office-based has also changed how people live. Millennials make use of co-working spaces, which are increasingly found in new residential developments, and many feel they have the freedom to adopt a more nomadic lifestyle.
“Initially, digital nomads were typically young entrepreneurs who relocated to cheaper destinations where accommodation placed less of a burden on their incomes,” says Sandra. “Now, however, working remotely is becoming more mainstream and we are seeing the rise of co-living, co-working spaces in good areas in prime global cities. She mentions the emergence of Roam, a network of upmarket co-living spaces that provides everything from Wi-Fi to shared workspaces, while promising an experience to engage and meet a diverse community of people.
Consumer patterns have changed as younger people have shown a willingness to utilise less space and to reduce the ownership of earthly goods, says Deon van Zyl, chairman of the Western Cape Property Development Forum. There is a worldwide movement to start sharing things that traditionally consumers would own, like a car, bicycle or motorbike. Called a shared economy or transient ownership, the trend has led to the emergence of businesses like the car-sharing network Zipcar, which operates in more than 50 cities across Europe and North America, allowing members access to well-maintained vehicles when they need it without the hassle or expenses of ownership.
Airbnb has become a household name as varied residential experiences have become the norm and the formalising of home exchanges have become common among the jet-set. Many investors choose to put their properties into a rental pool that is managed by hospitality networks and hotels. “The change in tech and increase in mobility mean that people are not fixed to a base,” says Deon. “Home has become the place where you sleep. The concept of micro- and shared living therefore is supported by technology and the lack of space, but most importantly changes in user expectation of house and home.”
Trend expert and founder of Flux Trends Dion Chang says although a shared economy and micro-living may have been spawned out of necessity by the millennial generation, the move to downsizing, or rightsizing, can be seen across all markets. People are being driven more by what they need and not just by what they want. Dion and his partner Chris recently sold their home, a “grande old dame” in Parktown North, Johannesburg, and bought a much smaller duplex in Hyde Park. For them, like for many others, this move was motivated by wanting to cut down on the maintenance required on a big property, and the desire for a lock-up-and-go place, better security and access to an urban lifestyle. Dion says going smaller and smarter doesn’t necessarily mean going cheaper, as the demand for sectional title is outstripping supply and has resulted in a superior growth in apartment prices.
In Copenhagen, the North Harbour, or Norhavn, is currently being transformed into a new city district. Part of this development includes a grain silo that has been converted into a striking 17-storey apartment complex with a mix of public and private functions. “We wanted to retain the spirit of The Silo as much as possible,” says Dan Stubbergaard, founder and creative director of the architectural design firm COBE. “The aim was to transform it from the inside out in such a way that its new inhabitants and the surrounding urban life would highlight the structure’s identity and heritage.”
It is not only industrial spaces that are offering creative opportunities. Dutch architects Gwendolyn Huisman and Marijn Boterman identified a piece of land measuring only 3.4 m wide and 20 m deep between residences in an old Rotterdam neighbourhood. The plot of land had been vacant for decades due to its small size. They designed the three-storey skinnySCAR house to occupy the narrow gap. The black brick house offers an innovative design solution to the urban reality of having to work with limited space. The trend for skinny houses is growing globally in high-density cities – one of the slimmest houses is a 122 cm-wide one in Poland.
Salt River in Cape Town was once an industrial hub for the city. The steel and locomotive industries were important in the suburb’s early development due to the expansion of the rail network in the early 1900s. Salt River is now experiencing a wave of gentrification because of its location close to the CBD. Like neighbouring Woodstock, the suburb is attracting developers and entrepreneurs who are responding to the demand for mixed-use living solutions for a growing young urban population. SALT is a new 11-storey residential complex. The Woodstock-Observatory-Salt River region is the fastest-growing housing market in the city over the past year. The SALT development falls within the Urban Development Zone, which means buyers can benefit from the UDZ tax incentive, which is designed to encourage inner-city development and renewal.
“International and local conversions of industrial spaces close to economic opportunities will continue because of the scarcity of land,” says Deon Van Zyl. “As long as there is some form of underlying value, there will be a willingness to experiment with new uses.”
Property accommodates people, and people’s needs change and evolve. “The savvy investor should consider how consumers needs will change and how one can creatively address these needs into the future,” says Deon. “People are growing older, more people are urbanised, and young people’s needs are changing. The wise investor should give these realities serious consideration and create property products that speak to these realities.”