Cape Town’s luxury property market is booming, despite water shortages and the possibility of an eventual complete water cut. The Atlantic Seaboard is the most sought-after region in the city for big spenders, and property developers are trying to keep up with the demand.
The Mother City’s luxury property sector placed second on the Prime International Residential Index 100 (PIRI 100), ahead of 98 other cities in the running. PIRI 100 assesses the value of prime homes and gives a global perspective on the luxury property market.
Property prices on the rise
China’s Guangzhou was the only city on the index to beat Cape Town. According to the report, Cape Town’s prime property prices increased by about 20% in 2017 due to perceived value and demand. Guangzhou’s prices increased more than 27% during the same period, and the global average increased by 2.1%.
The allure of the Atlantic Seaboard and the city bowl are not only attracting foreign buyers but also local investors from Johannesburg and Durban. This is putting pressure on property developers as new and existing properties are in short supply, despite the rapid growth in construction of developments.
Cape Town is a highly sought after city for ultra-high-net-worth individuals internationally. Studio apartments can range anywhere from R1.2m to R30m depending on location within Cape Town. The average two-bedroom, two-bathroom apartment sells for around R5m. Compared to mega-cities such as New York, London and Sydney, Cape Town can offer more to property investors n terms of space and value for money.
Wealth on the rise
The report also indicates that the number of people worth over $50m (or R592m) is growing. These ultra-wealthy individuals amount to just under 130 000 people – a 10% increase from 2016. The report indicates that this number could grow by 40% by 2022, taking the total number of ultra-wealthy individuals to 182 000.
Despite Africa’s 8% decrease of ultra-wealthy individuals since 2013, South Africa is expected to see a 20% increase over the next five years.
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