Black consumers are now the largest profile buyers at auctions. Auction Alliance’s first and second quarter research is showing that the racial profile of buyers has changed significantly over the last two years. In all regions of the country, purchasers across the board are primarily black with a large Indian buyer presence in both KwaZulu-Natal and Gauteng. The one exception is the Western Cape where buyers are still largely white males. Our current research mirrors the recent municipal elections with the Western Cape being the one region which is different to the rest. This is clearly about the racial composition of that province.
Until 2010, the largest buyer demographic were white males aged between 45 and 55. However, these figures are rapidly changing and revealing that a black investor class is growing far faster than many people realise. Auction Alliance has been propelled by the evolving buyer demographic to begin researching the possible impacts that this change will have on both the company itself and the auction industry as a whole. Our colleagues involved in motor vehicle sales, have been reporting for some time now that black buyers have dominated their auction sales, which has contributed to the growth of motor vehicle auction attendances and prices nationwide.
In 2009, Auction Alliance noticed that residential properties in Gauteng, Mpumalanga and Limpopo were being aggressively snapped up at auctions by the burgeoning black middle class. Many of the residential properties that we have sold are repossessions and over 68% of distressed properties in the Northern Provinces are being bought by black buyers. We first picked up this growing black buyer class in the sub R1million price range, but over the last 24 months, this has shifted to premier luxury properties in some of the country’s most sought after locations. In fact, we have sold our highest value residential properties in areas such as Zimbali, Sandhurst and Hyde Park to black buyers. This is truly fantastic news for the embattled luxury property market.
There has also been a solid demand for game farms by black buyers. We see the game farm sector as a highly lucrative and strong growth area. There has been some interest in other agricultural properties from black buyers but there is no doubt that luxury lodges, and leisure game farms are increasingly being snapped up by the upper echelons of the black middle class.
On the commercial property side, we have noticed that black buyers have grown the most aggressively. Many of the properties which we have been selling for listed property funds and private corporations are being snapped up by black investors and consortiums. At a recent auction in Johannesburg, the buyer demographic was evident, with several black investor consortiums buying prime retail, industrial and office real estate. Like the residential market, this is outstanding news for the commercial property sector which has recently seen the listing of Rebosis, the first black-managed and substantially black-held property fund on the JSE.
What this latest research shows us is that auction companies are going to have to realign their strategies. Many traditional South African auction companies have until now, been wholly owned and dominated by white families. This trend will no doubt change in the imminent future as the whole investor dynamic transforms in South Africa.