What i learned selling a MICRO APARTMENT
Category Property Investment
Micro apartments seem to be the latest new trend and developments are popping up all over Cape Town marketing these apartments as the next go to investment and opportunity for real estate investors.
The question is whether these apartments are really going to be the next big thing to hit the Cape Town Real Estate Market or simply just a fad?
Firstly lets take a step back and establish what exactly a micro apartment is.
Micro apartments are smaller than average studios and generally measure between 15-25 square metres in one self contained living space designed to accommodate sleeping area, sitting space and kitchenette all in one with only the bathroom having a separation.
Micro apartments are normally located in busy cities around the world and offer functionality in a convenient location for people on the go.
I recently had the opportunity to sell my first 18sqm micro apartment and these are the insights I gained:
Price
The apartment was listed in Three Anchor Bay, Cape town for R950 000 and although very small it is important to note that its almost impossible to find an apartment under R1m in the area.
Response Rate
Upon listing, the enquiries flooded in immediately and was reminiscent of the top of the property cycle a few years back when every property listed resulted in numerous enquiries and interest.
Viewings
Viewings were scheduled and initial reaction from clients was a mixture of shock due to the size and trying to understand how to maximise the available space along with getting an understanding of the type of person that would rent and stay in an apartment that small.
Airbnb/short term not allowed in the building so rental yield would need to be factored in on a long term rental.
Offers
Subsequent to listing and first viewing, I received 4 offers, 2 of which were from people that made offers without even seeing the apartment and just based on the photos/video and info provided in the advert.
The Verdict
This was one of the quickest cash sales ive concluded in a while and indicates that at a price point below R1m there are a lot of buyers with cash on hand and seeing an apartment (albeit tiny) in a good location like this one in Three Anchor Bay, Cape Town with sea views and a parking bay ticks all the boxes and appeals to a number of investors.
The purchaser ended up being someone that lives out of town and this was going to be a sort of 'stay over' apartment when she is in Cape Town which is at least 1-2 times a week.
Important to note that if this micro apartment was located in the city or in areas where there are many other micro apartments, the result may have been very different as it would then not have been so unique.
My takeaway from this and advice to any investor that is thinking to purchase a micro apartment investment would be to ask yourself the following questions:
Is this apartment in a good location?
How easy will it be to rent out?
Will I be happy with the rental yield?
Does the building or location offer amenities?
If more similar concept buildings go up in the vicinity offering micro apartments will mine still be in demand for rental and importantly will there be a good demand if I sell one day?
Answering these questions should go a long way in assisting you to make your final decision
If you are thinking of investing in property in Cape Town and would like some advice, please feel free to contact me on cesar@kinesisproperty.co.za or 0829316166
Author: Cesar Alexandre
