Experts predict that investors will be drawn to the Cape Town residential property market
As the global economy gains momentum and continues to grow, experts predict that investors will be drawn to the Cape Town residential property market, ranked as the second top-performing market in the world.
According to Knight Frank 2018 Wealth Report’s Prime International Residential Index (PIRI 100), Cape Town grew by 19.9% between 2016 and 2017.
With data provider Wealth-X predicting the world’s ultra-wealthy individuals should increase by 40% by 2022 and that the super-wealthy are acquiring both secondary properties and passports, Knight Frank South Africa’s managing director Susan Turner says this puts Cape Town’s luxury residential market in a “prime position” within the investment landscape.
She says the Western Cape has seen exceptional house-price growth over the past five years, especially in the Atlantic Seaboard and City Bowl, where the limited space to build is driving prices. Adding to this demand is a trend of semigration of property buyers from other provinces like Gauteng.
The Wealth Report also indicates that although clients had increased their exposure to equities over the past year, the second largest rise was in property, with private capital fuelling global property deals worth more than $1 billion (about R11.9bn) in 2017.
Furthermore, the appetite for private investors to buy overseas remains solid, with one-third of respondents planning to invest outside their domestic market in 2018.
VALUE FOR MONEY
Not only does Cape Town offer a world-renowned business address, it is consistently ranked as a leading tourism destination. The high quality of life and value for money also make the city a sought-after residential address.
For international investors, the floor space is very attractive compared to other popular cities like New York, London, Sydney and Hong Kong. For example, the asking price for a 91m², two-bedroom flat in London city is £4.1 million (about R67.7m), whereas £3.9m in Cape Town could buy a five-bedroomed homestead with two guest cottages, staff accommodation and stabling for five horses, covering 19 000m².
However, the report noted that against a backdrop of constrained supply, development opportunities in Cape Town are scarce, and that prime prices increased by almost 20% year on year. Both new and existing stock are in short supply.
In addition to value from a price point of view, the Wealth Report used the city’s Zeitz Museum of Contemporary Art Africa as an example of the “stunning style” that can be created by 21st century synergies between art, wealth, and property.
The city’s CBD was also featured, with Knight Frank’s Richard Hardie saying it was also emerging as a sought-after residential postcode.“The city’s central core extends from the harbour, with Strand Street and the railway station at its heart. Once dominated by high-rise office blocks, an injection of new capital and innovative ideas is changing both the atmosphere and the skyline.
“Initiatives such as First Thursdays, world-class restaurants, and its views of Table Mountain and Table Bay, have led to an upsurge in interest from CBD workers anxious to spend more time enjoying their leisure hours and less time commuting… ”