Key European cities, along with Cape Town, however, are expected to show the highest growth.
One million US dollars (R14m) will buy investors 177m² of prime property in Cape Town, making it one of the most affordable key global cities, the 2019 Knight Frank World Weather Report has found.
In the list of the world’s 20 key cities, the Mother City is only beaten by Sao Paulo which can offer 200m² of prime property for that price. By comparison, $1 million will reward investors with 16m² of prime property in Monaco, 22m² in Hong Kong, and 31m² in New York and London.
Despite this, the research shows that Cape Town does not feature as prominently on the radars of international investors as other global cities, with North American investors favouring other American cities ($362 billion), European investors opting for Germany ($49bn), and Asia-Pacific investors putting their money into property in China ($25bn).
Looking ahead, the report predicts the next 12 months will see a shift in the performance of global property markets, as purchasers and investors respond to greater uncertainty in the global economy, a proliferation of market regulation and the rising cost of debt.
“Trade tensions, political events and an increasing debt burden, alongside rising interest rates, will conspire to ensure there is a slowdown in economic growth across the world this year.
“This change in the economic landscape will be reflected in lower price growth in global residential markets. This more muted growth will in turn result in changing real estate investment strategies, as investors focus on income, asset management and development opportunities in order to secure out-performance as debt costs rise.”
Of the cities forecast, the report predicts that Buenos Aires, Dubai, Hong Kong, Mumbai, and Shanghai will see prices fall this year, while New York and Singapore will see them static.
Key European cities, along with Cape Town, however, are expected to show the highest growth. “These are increasingly popular investment hubs for European and global investors, with a growing presence from Chinese buyers.”
Richard Hardie, chief executive of Knight Frank South Africa says wealth and spending trends indicated in the report show highlights from hotspots of the year ahead. Key European cities are mentioned, and Cape Town “most certainly gets noticed as well”.
“Cape Town sits well in line with the expectation that the market will pick up in 2019 after the drought and political instability. This optimistic view of Cape Town is also reflected in the Wealth Report and remains popular due to the exchange rate and lifestyle choices.”
The Knight Frank report says some of the world’s future prime residential neighbourhoods are:
- Wynyard Quarter, Auckland
- Alabang, Metro Manila
- Yangpu Riverside, Shanghai
- Applecross, Perth
- Hung Hom, Hong Kong
- St Kilda Road Precinct, Melbourne
- Delray Beach, Florida
- The West Coast, Barbados
- Pasadena, Los Angeles
- Friedrichshain, Berlin
- Trois Chénes, Geneva
- The Seaport District, Boston
- 11th arrondissement, Paris
- Chelsea, London.