Property: Formula for success
Category Financial Mail
Is Rosebank starting to overtake nearby Sandton as Johannesburg’s most desirable work, live and play hub?
It appears so, judging by the record rentals being achieved in the node for new, top-notch office space and the burgeoning demand for luxury apartment living.
Rentals for new, premium-grade offices in Rosebank have recently surpassed those in Sandton, according to the latest data from Jones Lang LaSalle.
Corporate tenants in Rosebank are forking out an average R230/m ² (gross) for premium-grade office space in Rosebank, while their Sandton counterparts are paying an average R207/m ² for space of similar quality.
That follows a 9% jump in Rosebank office rentals in the second quarter (year-on-year), the highest growth in any Johannesburg office node, and comfortably ahead of Fourways, Johannesburg’s next-best performer, at 3.37%, and Sandton at 2.48%.
Rosebank is also starting to lure upper-end residential investors, with a number of old, dilapidated flats along Tyrwhitt and Bath avenues making way for modern, high-rise apartment buildings.
New residential developments that are under construction (or in the planning phase) in Rosebank are selling for up to R40 000/m², which is roughly on a par with the R35 000/m²-R45 000/m² investors are forking out for luxury apartments in Sandton and Melrose Arch.
Industry players say the presence of the Gautrain station has been a key driver of Rosebank’s reinvention as a mixed-use node. The relocation of Standard Bank to its new R2bn head quarters on the corner of Oxford Road and Baker Street as well as the extensive redevelopment of Rosebank Mall and The Zone@Rosebank have further boosted investor confidence.
A confined road network also means that Rosebank’s CBD can easily accommodate a mix of office, retail and residential developments within close walking proximity of one another, says Mike Ruttel, development director of Redefine Properties, which is a major landlord in Rosebank.
He confirms that Rosebank is becoming the destination of choice among corporates. The new Rosebank Towers building of Redefine and Abland, which is nearing completion opposite The Firs on Biermann Avenue, has achieved rentals of between R240/m² and R260/m² (gross). That’s more than Redefine is fetching for new space in Sandton. "A key reason for Rosebank’s growing popularity is that it is not as congested as Sandton in terms of traffic. It also offers a leafy, pedestrianised environment that you don’t find in Sandton," Ruttel says.
The strong uptake of office space at Rosebank Towers, which is nearing the 90% pre-let level, has prompted Redefine to push the button on the redevelopment of the old Rosebank Mews next to the Game store on the doorstep of the Gautrain station.
The new development, to be named Rosebank Link, will consist of 18 300m² of lettable office space. Redefine, again in partnership with Abland, is also looking to redevelop the Times Media building on the old Galleria site on the corner of Biermann and Bath avenues.
Ruttel says the site is being rezoned, with plans for a development of up to 85 000m² that could include a mix of office, hotel and retail space as well as 85 to 100 residential apartments.
In terms of residential developments, more than 700 apartments are in various construction and planning phases. Renprop’s recently completed The Vantage on Bath Avenue sold out at launch in early 2014 at an average R29 000/m². Recent resales achieved R39 000/m².
Renprop, in conjunction with development partner Grapnel Property Group, has since launched another two apartment developments in Rosebank — The Tyrwhitt, a 12-storey building on the corner of Bath and Tyrwhitt avenues, and The Median, opposite The Zone@Rosebank on the old Absa building site.
Renprop MD Chris Renecle says the 200 one-and two bedroom apartments and penthouses in The Tyrwhitt are already 65% sold at prices ranging from R1.9m to R12m. That translates into a R/m² rate of roughly R36 000/m² - R40 000/m².
Renecle says buyers at The Tyrwhitt and The Median are likely to see similar capital appreciation as at The Vantage, where capital growth above 25% has been experienced during the 18-month construction phase. "That is phenomenal growth and reaffirms the strong demand for executive apartments in the Rosebank precinct," he says.
While Renprop’s sales success underscores the growing demand for upmarket apartment living in Rosebank, some industry players say developers should be cautious not to price themselves out of the market.
Ronald Ennik, CEO and founder of Gauteng-based Ennik Estates, believes that developers have the opportunity to turn Rosebank into a true 24-hour live, work and play precinct, unlike Sandton. Ennik says the Sandton CBD never managed to transform itself into a pedestrianised, mixed-use node as developers shied away from creating sufficient residential stock.
Though there were plans to add hundreds of residential units to the Sandton CBD in the early to mid-2000s, many of these proposed projects were canned on the back of fears that the housing market back then was heading for a bubble.
"If these projects had gone ahead, Sandton would probably not be sitting with the traffic congestion issues it has today." Ennik says developers should not repeat the same mistake in Rosebank, as the node lends itself to high-density apartment living. However, he believes the price point for sectional title apartments is key. "I don’t think developers should go too big or too expensive."
Redefine’s Ruttel agrees. The company recently decided to downscale its new Park Central development on the corner of Baker Street and Keyes Avenue, which is Redefine’s first foray into the residential market.
When Redefine originally launched Park Central in early 2015, the plan was to build 400 luxury apartments. "But we didn’t generate sales fast enough for our liking, so we decided to scale the project back to 150 apartments, and reduced the specs and configurations to offer a wider range of choice to buyers."
Ruttel says the company is now nearing the 50% pre-sales mark with prices ranging from R1.7m to R15m, which translates into an average R30 000/m²-R40 000/m². "The bulk of buyers are no doubt interested in units priced at the lower end of that spectrum," he says.
Author: Joan Muller
