Durban building supervisor Njabule Mkhanyawo is stepping onto the property ladder for the first time despite not having a comprehensive credit history or money for a deposit, thanks to a novel inner-city development that will give people like him the opportunity to own Umhlanga-styled pads.
Channelling New York-style industrial design, developer Urban Lifestyle Investment has taken an old office building in Durban’s central business district (CBD) and converted it into a block of flats, known as The Watt Club.
The company has been at the forefront of converting underutilised commercial buildings into residences in cities such as Johannesburg and Durban. The Durban project is an answer to decades-long demand for more accessible property ownership for low-income earners wanting to live in the inner city.
The Watt Club offers a “rent-to-own” scheme that tackles the challenges of upfront costs such as a deposit, or cash on hand for bond and transfer costs. Residents pay a monthly rent and have a contractual option to buy at any stage during a 15-year period. The purchase price reduces over the rental period.
The financing model could see inner cities rejuvenated while opening the door to first-time homeowners.
Mkhanyawo, 38, is renting a spacious studio apartment which he will own in 15 years. He was among the first residents to secure his apartment when the scheme launched in early December, and plans to eventually buy more properties.
“I have been wanting to buy property, but I didn’t qualify [for bank finance]. When I saw this opportunity I grabbed it and booked my flat,” he says. “It’s a brilliant idea. There are so many working-class people who want to own property but don’t qualify for loans.
“I am so impressed by all the facilities. The décor is on point and the view is spectacular.”
Craig Turner of The Watt Club project says: “It is an unfortunate reality that getting onto the property ladder is not easy, especially in the inner-city market. Consumers, particularly at the lower end of the income segment, have struggled due to insufficient capital for deposits, transfer and bond costs, and a lack of credit history and profiling. This has led to a rental culture that does not inspire property ownership.
“Our buildings aim to give individuals a space to thrive within central city locations. Not only that, but we have created a truly special product offering that has the look and feel of something you would expect to see in Umhlanga or Rosebank,” Turner says.
“We have pushed the envelope with The Watt Club in giving new life to an existing building while creating a community-focused shared economy lifestyle where you have 24-hour, hi-tech security, facial-recognition access control, hotel-style smart locks, a gym, co-working spaces, games rooms and communal lounge areas, and an unrivalled rooftop communal space with 360-degree views of the city.”
Consumers, particularly at the lower end of the income segment, have struggled due to insufficient capital for deposits, transfer and bond costs ... This has led to a rental culture that does not inspire property ownership
— Craig Turner of The Watt Club project
Rental rates start at R6,500 a month and include studio, one- and two-bedroom apartments.
“As an affordable location, statistics indicate that there is an attraction of a younger market where 45% of sales in 2020 were between R400,000 and R875,000,” Turner says.
“Our research has allowed us to take these elements into consideration and deliberately implement solutions that cater to the market, including competitive pricing to combat these factors, as well as create options that address the fact that many new homeowners don’t have the capital to outlay upfront costs.
“The product gives individuals the ability to increase a property portfolio without extending debt exposure with banks.”
Andrew Golding, head of Pam Golding Properties, says inner-city living is likely to become increasingly popular. “For many young people, living in the CBD is not only about access to work it is also about the ‘buzz’ factor. Given SA’s young population, many are likely to prefer life in a city hub to the quiet life in the country,” he says.
“Well-located apartments in a business hub continue to offer an appealing lifestyle to many young buyers, with the buzz of city living with bars, clubs, coffee shops, restaurants and other entertainment and numerous work opportunities, or at least co-working spaces and proximity for start-ups and SMMEs.”
The starting monthly rental rate at Durban’s The Watt Club.
— IN NUMBERS: R6,500
Cape Town’s central city saw sales surge in 2021, “suggesting that, contrary to initial theories, inner-city living retains its appeal despite the ongoing pandemic”, Golding says.
Sandra Gordon, a property research analyst, says: “The median price of sectional title homes in central Durban has risen steadily over the past decade, currently averaging R420,000 for units sold across the market in 2021 to date.
“Both activity levels and prices in the inner-city housing market remained resilient despite the pandemic and the repeated lockdowns,” she says.
“With just over 40% of all recent buyers being young adults, this age profile suggests that many first-time buyers have purchased homes in the area in the part year.
“In the Point area, where 98.3% are sectional-title homes, the age profile of existing homeowners and recent buyers is very similar to the pattern seen in Durban Central, with 46% of recent buyers aged between 18 and 35 years,” Gordon says.
“In both areas, a quarter of existing owners are retirees, while the largest cohort of new buyers are young adults, suggesting that there is a clear demographic shift in the housing market in Durban central and surrounds as students and first-time homeowners take advantage of the new residential units released onto the market as a result of the ‘post-Covid’ redevelopment.”
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