Buying and setting up a newly built studio apartment in Sea Point Cape Town

This is an overview of buying and setting up a very small (micro) apartment in Sea Point, Cape Town. I’ll try and throw in some insights and ideas over the course of this post: things learned, problems that could have been avoided. Points that would, in an ideal world, make a similar project flow smoothly to a perfect, stress-free and punctual conclusion.

And let’s start in the final paragraphs of the micro-flat for investment and also for living in screenplay. With 2 of us taking up all 20m² (+ 3m² for the balcony) of this small accommodation. This is being typed at its wall mounted desk, listening to internet radio fado and jazz on a borrowed Philips bluetooth stereo speaker. As investment property people do.

The entire project cost these particular investors just short of R1500000, USD83000 or GBP625000. That’s buying it off plan even before the demolition of the old building on the site, and includes purchase costs and furniture and equipment. Yes, there was a discount for getting in early on the development and then waiting for over 2 years for the finished product; and these discounts have become harder to access now. But getting on the mailing list of a developer isn’t hard. When they need money for new projects they will be sure to direct enthusiastic messages about upcoming buildings at you. Get in early, get on with living and before you know it you will have a brand new property that should already be worth more than its original purchase price.

So here we are, but how did we get here?

The buy. It took nearly 2 and a half years from the signing and paying the deposit (September 2022) to actual transfer of the property. The property developers sell you shares in a company that represent the property you are buying. It hasn’t been built yet. It’s normal to buy an off-plan flat in an unbuilt state but subscribing to shares in the company that will ultimately consist of an apartment block was a new gig. You buy shares in a new company to the value of the flat you are buying. You pay a deposit, 40% in our case. and the balance at the end of the construction. The company ends up with a block of flats and then buys your shares back off you, paying for them with the apartment you wanted at the start of the process. I think if you are getting a bond you put down a minimum of 10% so this is probably a less risky option.

It’s a long time until key handover, even longer till transfer and so it’s easy to just let things run their course. When the share purchase agreement is first signed the building is not much more than a multi-storey floor plan. The building site still consisted of some restaurants and flats which would be demolished should the project attain the required amount in pre-sales and building permission from the City of Cape Town, We had a layout diagram of the unit we had chosen and some digitally generated images. Detail of finishes and included fittings was limited.

The share agreement actually states that there are documents that the investor/buyer acknowledges are incomplete and subject to change at the time of signing. In skimming through the dreary contractual clauses this point (and others) were missed. But over the next few months the overall fuzzyness that this clause implied became more tangible.

Here are a few unknowns in that early stage:

What parking bay are you getting? That’s if you decided to purchase one.
Is there a place for a washing machine? And water/power point as well as a drainage outlet?
What counters, desks, shelving and other fixtures are included?
How does the fold-out bed actually work?
Where does the air conditioning unit go?
What are the options for curtains or other window coverings

So, read the contract properly and be aware of its flaws. Try and resolve them before signing. The developer may not indulge you and accept any alterations but if you decide to proceed you have already noted the issues and may be able to slip them in as an appendix to the deal. We managed to do that for the parking: noting that it would be allocated within a couple of months of signing. It wasn’t but it ultimately enabled us to be one of the first to choose a parking space when they were eventually laid out.

Keep an eye open for updates from the developer, set reminders to check up on progress every 3 months, start planning the layout and functionality of the apartment using the floorplan and the gradual trickle of information you should be getting from the developer. In our case we got the “Schedule of Finishes” just 10 months after signing the purchase contract. Same for the “Furniture Price List”. Looking at the meta-data of both these documents they were created in October 2022 so I don’t know why we only became aware of them nearly a year later. Anyway, these were both useful in (mostly) confirming what was going to be included. In fact going through the list of finishes now there is the tantalising mention of “Intercom System – Building Intercom connected to mobile device” that we totally overlooked. Must get the app. (In fact the app is called evtrack.com).

At this stage we were able to work out that not all the counters and work surfaces shown on the original floor plan were included. Towel rails and toilet roll holders in the bathroom were included but a mirrored bathroom cabinet had to be ordered and paid for separately. To get air conditioning included was an extra R70000. That’s a lot of money to cool or warm 20m². The outdoor unit was going to be mounted on the balcony and not downstairs in the basement so it wasn’t as if it was going to be a fancy installation. We decided to wait and get our own installation done once we had access to the unit. We used the company that did all the developer’s installations and got a nice Daikin system for just under R30000.