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Value in Renovating Old Properties

2 October 2006

Homebuyers are often faced with the question of whether it makes more economic sense to buy a home and renovate or pay up for something that is in mint condition — so how should they decide?  

Sharon Westcott of Lew Geffen Sotheby’s International Realty, Umhlanga says, “We recently sold an 86 square meter, 2 bedroomed, renovated apartment with very basic finishes, within walking distance of La Lucia mall for R859 000.  

In places like Ilala Ridge, further up the hill within the La Lucia area, 1 bedroomed apartments in new developments will sell for anything from R1.1 million for around 100 square meters.

“It makes sense to renovate if you can do so for a substantial discount to buying new. In addition, renovating can give you more personal choice in layout and living space than developments where all you can really alter are the finishes.  

‘This is especially true for first time homebuyers and it often is the more affordable option. They can upgrade their home when they have the finances.’  

Westcott notes that if you buy a second hand apartment, renovating will generally cost you between R1500 — R3000fsq however she warns that people have a propensity to underestimate the true costs of upgrading and should get several quotes for the work beforehand so they can make a truly informed decision.  

‘Developers are finding it increasingly difficult to find cost effective opportunities. Costs of developable land, especially near the metropole areas of SA, is on the increase as less becomes available. It is a matter of time before the land and building costs start to outstrip achievable unit prices in new developments. This can only but drive the second hand home market where, one can buy and renovate for fat less than the cost of purchasing a new unit.  

“My advice to buyers is that there are still good deals to be found in the development market however they need to weigh up all the available options in both the second hand and new market and work out exactly which offers them the best value In their chosen area.’

(Property24, 2 Oct, 2006) 

Source: Nedbank Property Talk