Cape Town is consistently topping the list as an investment hotspot for property buyers. With recent sales figures showing that there has been an increase in property purchases across the exclusive Atlantic Seaboard, Jacques Van Embden, CEO of Blok, shares some insights into why these ‘Prime 10’ suburbs of Cape Town are such a drawcard and what this means for the property market going forward.
Primely positioned with endless ocean views while still hugging one of the world’s natural wonders – Table Mountain, January 2023 saw foreign investment in Camps Bay alone totalling almost R55,000,000. Add to that figures from February (R90,850,000) and March (62,350,000), and one quickly realises that the appetite for property investment along the Atlantic Seaboard is far from satiated.
Location, location, location seems to be the driving force for investment property. Gorgeous green spaces with beachfront promenades peppered with trendy restaurants offering some of the best views and access to vibrant and dynamic nightlife are fast becoming sought after living spaces for smart buyers. Quality of life is also a defining factor for foreign investors who enjoy our long summers and temperate winters.
Just who are these property buyers?
In terms of luxury property – properties over R3,000,000 – international buyers make up an estimated 20%. Local buyers, many of them semigrating from inland cities, are also headed to the fair Cape now that Covid-19 has given rise to more and more remote working options. Instead of choosing international options, these buyers are remaining in South Africa but are still seeking a better quality of life. There are estimations that if semigration to the coastal province continues at its current rate, it will overtake Gauteng’s GDP per capita by 2040, if not earlier.
Aside from luxury property, there has also been an increase in oceanside apartments. A prime example of an area of growth for the region is Sea Point which is becoming increasingly popular for those looking for connected living spaces. The evolution of property development that extends living spaces beyond the front door with expansion into bustling restaurant-lined streets, beach-side walkways, outdoor gyms and green spaces, for example, is becoming an extremely attractive drawcard for buyers across the board – from seasoned investors to young up-and-comers, to empty nesters.
What does this mean for the property market?
Despite facing geopolitical instability, the Western Cape has been touted as one of the most exciting emerging markets globally, with growth in sales along the Atlantic Seaboard being a clear indication that investors see the massive benefit of making long-term property investments in the region.
The latest Residential Property Price Index Report reveals that as more and more property in prime locations is snapped up, prices are rising as the supply of homes dwindles. In fact, Cape Town’s residential property price index has grown by 141% since 2010 and the area’s price increases have been consistently higher than other metros, despite a tough economy. As demand outstrips supply, we will probably see a trend of areas outside established urban and suburban districts gaining more attention from home seekers.
The Western Cape has also initiated a forward-thinking program to enhance infrastructure, communities, industry, and particularly green energy and technology initiatives which, if implemented successfully, will only enhance the appeal for both local and foreign investment.
The interest rate is going to be a key factor that shapes the buying market. If governance remains stable we should see the continuation of foreign buyers returning to SA – and more specifically the Western Cape – and this positive contributor to the demand side of the market will add more buoyance to pricing and yields.
Of course there are challenges to be faced. Safety and security for example, are still fundamental considerations for those looking to make long term investments. The crucial caveat is that if local communities and their municipalities can collaborate and work together to keep safety levels best of breed, we can create concentrated areas of excellence that can bode incredible well for the property market well into the future. The demand is there, it is up to us now to collectively make sure we can meet that demand in the best possible way to continue to attract investment and drive the burgeoning economy.