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Great Cape
South Africa’s “Mother City” could be one of the world’s best-kept property secrets
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
Sitting on the beach at any of thecafes that dot the shores of TableBay in Cape Town, it’s easy to seewhy the Dutch settled it in the 17th century.Surrounded by natural beauty and blessed witha Mediterranean climate, the city has a young,relaxed vibe that makes it easy to forget CapeTown is a vital business centre and port, withmining, shipbuilding and tourism contributing toa burgeoning local economy. And as a bonusStellenbosch and Franschhoek among othersare just down the road in South Africa’s primarywine-producing region.
Cape Town has also played its part in SouthAfrica’s complex history, and its city hall wasthe location for Nelson Mandela’s first publicaddress after being released from prison onRobben Island — just off the coast of CapeTown — in 1990; a fitting location as it’s oneof the world’s most diverse cities. Transitinfrastructure, hospitals, schools and otherpublic works are on the upswing and it’screating a demand for homes at every level inand around the city. Visiting Cape Town is likewatching a nation write its history from one dayto the next.
Unemployment is a factor in the country’seconomic recovery and there’s a credit supplycrunch that’s impacting on spending across theboard, but the fundamentals to buoy propertygrowth are improving slowly (affordability, slowdeterioration) and Standard Bank forecastproperty growth to be around 6 percent thisyear. The standard of living for everyone isrising, and Pam Golding Properties (PGP), aSavills associate, reported a 12 percent rise involume and value between March and May ofthis year over the same period in 2009. In otherwords, the market is generally upbeat.
There are no restrictions on foreign ownershipby non-residents in South Africa, and potentialbuyers can even arrange up to 50 percentfinancing locally. The lifestyle, emergingeconomy, home sizes and existing infrastructuremake for good value, and the country, as thecontinent’s most developed, has been andremains the gateway to Africa. It’s not perfect— South Africans will admit crime and diseaseare urgent problems — but it’s also not whatyou read in the papers. The success of the lastFIFA World Cup, at one point in danger of beingrelocated to Sydney, proves that the country ismoving in the right direction. And people arestarting to ask questions.
“The World Cup has, as anticipated, not hadany notable short term impact on the propertymarket, however, it is the medium to long termeffect — the next 5 to 10 years — which webelieve will have long-lasting and positivebenefits for the property industry in SouthAfrica,” begins Dr Andrew Golding, chiefexecutive of PGP. Citing the massive exposure that resulted from the event, Golding predictsa marked increase in tourism and investmentalong with that. “While there are those in themarketplace who had unrealistic expectationsin regard to the rental market, the reality is thatthe permanent rentals market remains the areawhere we are seeing considerable demand— in fact performing beyond expectationfrom the end of 2009,” he reasons. Returningexpatriates unsure as to where they want tosettle are keeping the rental market strong, andforeign investors are seeing capital growth thelevel of 10 to 15 percent on what Golding termsan “undervalued” market.
Soft prices and strong supply make investingsound when you consider the kind of propertiesavailable; Cape Town has no shortage ofpremium real estate. “South Africa is hometo some of the world’s prime real estate setin spectacular environs with arguably someof the best views and scenery globally,” saysGolding. “Luxury properties at the very top endof the market are extremely spacious by worldstandards, of world-class quality and designand compete with the best in the world and aresought after among overseas buyers.”
Rentals in the Cape Town vary widely fromregion to region: a central City Bowl twobedroomflat can start around ZAR6,000(HK$6,700), while a similar unit in the northernsuburbs begins around ZAR3,500, ZAR500in the south, and ZAR15,000 in tony CampsBay and Clifton on the Atlantic. Sales figurescan be as astonishing as any in Europe orNorth America. Golding points out that PGPhas recently sold homes in Clifton for ZAR30,35 and 45 million. If you’ve seen Clifton, you’llknow that HK$50 million is a bargain relative tothe “view” that would get you in Shatin.
Coastal and city properties are high on thewish list for buyers and in the bustling southlike Claremont, but as Golding mentions, “Theholiday home market is quiet, however thereare excellent buys available (houses, clusterhouses and plots) all along the West Coast.The Western Cape area enjoys relative stabilitywith limited stock and high demand.” Theseareas are prime locations largely due to the factbanks consider them low risk with regards tomortgages.
As for the luxury sector, it’s currently sittingat low ebb. “At the beginning of the downturnthe top end maintained considerable buoyancywith enthusiastic local cash buyers paying theprices demanded by non-distressed sellers,”Golding explains. However, the recessioneventually caught up: stock increased, buyersbecame more cautious and that put pressureon prices. But that may not last for much longerif indicators for every other sector are duplicatedand those foreign enquiries translate to sales.You may need to master “Howzit?” yet.
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