Investing in property in South Africa: Why Cape Town still eclipses other cities
Category Newsletter: Article
South Africa's natural beauty makes it an appealing travel destination for locals who want to explore their neighbouring cities and foreigners who appreciate the country's otherworldly locations and unique beauty.
One thing exploring the country's natural beauty draws attention to is an area's real estate. No matter where you go in the country, the homes can be breathtaking, and whether you want to put down roots in other parts of the country or are looking for an investment property, knowing where to buy is crucial and what to look for even more so.
Why Cape Town is the Best City to Invest in Property in South Africa
Despite the country's challenges - primarily load shedding -South Africa has emerged as a real estate market of note. In this country's suburbs, you can find everything you want.
For that reason, many of the country's ex-pats are returning to South Africa to snatch up real estate.
Among South Africa's major cities, Cape Town stands out. It's more than the mountains, the beaches, the vineyards, and the views - Cape Town's real estate has resilience, given the city is a favourite among ex-pats and local buyers, who appreciate the city's value.
Centrality
Cape Town's suburbs offer centrality to many amenities, often requiring homeowners to drive no more than five to ten minutes beyond their fences to get what they need. It's not just shops and restaurants but hospitals, schools, safe green spaces, and recreational facilities that are within walking or driving distance of most homes in the city.
That centrality is often not repeated elsewhere in the country, especially among affluent suburbs. Most major cities in South Africa are further from most amenities to maintain safety and seclusion.
Variety
Similar to each touristy location within Cape Town's city limits that offers something for everyone, Cape Town's suburbs provide that same mix. You can find that same variety along the west coast, the city centre, the northern or southern suburbs, or the Atlantic or eastern Seaboard. These areas offer options that appeal to would-be buyers looking for an investment property, primary or secondary residence.
Affluent Repeat Buyers and Renters
Only two things should matter to property investors: that a home can be sold for profit or that you can rent it for profit.
Cape Town has a concentrated market of interested buyers and tenants, which is why sellers and landlords can demand top dollar for their properties.
The city has also become a go-to destination for semigrators, attracting buyers from further north who are drawn to Cape Town because of the schools, safety, and overall lifestyle offered by living in the world's 11th best city, according to the Time Out Index.
For example, the average sale price for homes in Camps Bay topped $14.2 million in 2021, with the suburb achieving more than $700 million in sales.
Buyers in Cape Town also tend to spend more on residential real estate than buyers anywhere else in the country. The average sale price in Cape Town is R1 575 214, 22.7 per cent higher than Johannesburg, which has an average sale being R1 217 853.
Exponential Growth Rate
While Joburg is thought to be the economic hub of the country, property sales data shows Cape Town is still more desirable than any other city on the continent.
According to data from the Knight Frank Global Residential Cities Price Index, Cape Town has achieved 8.6 per cent year-on-year growth, ranking the city 33rd among 165 international cities. Johannesburg, however, only achieved 52nd place, achieving only 5 per cent year-on-year growth.
This growth rate is indicative of the property market being buoyant and thriving, even as other cities experience a downturn in sales.
The City's Plans
As load shedding cripples the country, Cape Town is making moves to get away from its reliance on Eskom and keep the lights on, incentivising the use of solar by buying electricity from solar users.
The city is also committed to improving investment in the city and making it Africa's tech capital.
The city of Cape Town has also invested heavily in crime prevention and is reducing homelessness in the City Centre, which includes launching a dedicated hotline to help assist with relocating vagrants.
Value For Money
Cape Town has been at the forefront of many of the property trends overtaking South Africa. From micro apartments in Sea Point, Green Point, and the City Centre to gated communities along the Southern Suburbs, buyers can find what they're looking for without the tremendous cost that would be associated with getting these kinds of world-class amenities elsewhere.
Author: Coastal Property Group
