Buying frenzy at property sale

Johannesburg - On Tuesday bargain hunters were out in full force in Sandton, where more than 500 residential units were snapped up for a combined R163m in one of the biggest property liquidation sales ever to hit South African auctions floors.

CEO of Alliance Group Rael Levitt told Fin24.com that about 300 people were packed into the auction room at Sandton's Radisson Hotel, where 507 flats, townhouses and clusters on the West Rand were sold under the hammer.

A total of 611 properties - spread between three massive developments in Honeydew, Ruimsig and Florida - were up for grabs. The three developments belonged to liquidated developer Philken Building Construction, one of the biggest residential property players on the West Rand before the company went belly-up.

Levitt said the positive response to Alliance Group's biggest liquidation auction ever underscores just how much appetite there is for bargain-buying opportunities.

The value proposition offered by distressed property sales on auction floors is clearly luring investors back into residential property, said Levitt. He estimated that prices achieved at Tuesday's auction were 20% to 30% below fair market value.

The 611 units are mostly aimed at the middle- to upper-income market. They are spread between an apartment block in Lakeview in Florida, upmarket cluster development Eagle Falls in Amarosa, Ruimsig and sectional-title development Honeydew Gardens in Honeydew.

Philken is not the first prominent developer to go bankrupt this year and is unlikely to be the last. Other casualties of the residential property slump are former high-flying Sandton-based developer MKB Property, which was active in swanky Sandhurst and Hyde Park, and the developer of the Ernie Els-designed Highland Golf and Trout Estate in the weekend enclave of Dullstroom. Both hit the wall in April.

- Fin24.com