The luxury property market in Cape Town is booming - promising a record-breaking year for sales.
This is according to Alexa Horne, MD of DG Properties, who says that they have experienced a particularly active and exciting first quarter of 2024.
The momentum has been building since late last year, marked by a notable uptick in buyer interest and activity. March was an extraordinary month for high-end property sales in Cape Town, surpassing all our sales forecasts.
In Bishopscourt alone, Horne concluded over R150 million in sales within just four weeks, and there were also significant sales made in nearby areas of Upper Constantia.
"Other areas attracting great interest are properties on the Atlantic Seaboard and areas such as Higgovale, Sea Point and the V&A Waterfront, as well as smaller luxury apartments and mixed-use developments located near the fringes of the CBD."
Who is driving this demand
"There is a strong appetite for luxury property in Cape Town from international buyers keen on exploring the Mother City's investment opportunities," said Horne, adding that the favourable currency for foreigners, as well as the unmatched value-for-money lifestyle on offer, continues to attract international buyers from the UAE, UK, Europe, and other African countries.
The Western Cape, and Cape Town in particular, is also enjoying the lion's share of semigration demand and wealthy local buyers - those seeking properties exceeding R20 million and even R30 million - are showing confidence in the market.
What buyers want
According to Horne, in addition to demand for freehold luxury homes, mixed-use sectional title developments in Cape Town's CBD, such as The Fynbos and Station House are currently being snapped up by a cross-section of buy-to-let investors as well as those seeking convenient urban living - close to the CBD and all its conveniences.
"Micro-developments are also in high demand. This indicates a strong market for new, innovative properties that cater to a 'live-play-work' ethos, with amenities such as rooftop terraces and fitness centres. There's also an ongoing interest in sustainable and eco-friendly properties, which aligns with a global trend towards environmental consciousness."
"Unsurprisingly, key features for buyers in Cape Town include solutions that manage loadshedding - an increasingly important factor in the South African home-buying experience," said Horne. "Additionally, eco-friendly features such as solar heating, water storage, purification and recycling systems, and the inclusion of a borehole are becoming top priorities."
"Furthermore, the trend toward integrated living environments is strong. Developments offering a seamless blend of residential, commercial, and recreational spaces - including restaurant or retail factors, gyms, and green spaces - are in high demand, appealing to a wide range of buyers looking for a holistic lifestyle experience."
Rental demand leads to shortages
And it's not just sales that have seen an uptick. "Factors such as the higher interest rates and semigration continue to significantly increase demand for rental properties in Cape Town," said Horne, adding that they are now experiencing rental stock shortages in many areas.
"In particular, the City Bowl, Atlantic Seaboard and Southern Suburbs have become highly sought-after areas, resulting in fierce competition for rental properties and significant rental stock shortages. We are also witnessing very healthy rental escalations across the board. Luxury properties in areas such as Upper Constantia, Bishopscourt and sought-after Atlantic Seaboard properties can now command well over R100,000 per month."
What to expect going forward
Going forward for the remainder of the year, Horne says that it's expected that property finance conditions will look to be more positive, with signs hopefully pointing towards cooling inflation and a more stable interest rate climate later in the year.
"Prevailing economic and geopolitical instability in Europe and Asia may further incentivise additional investment from abroad into Cape Town's property market. We also expect that relocation and the search for areas and regions where 'things work' are likely to remain a key feature in the property market in 2024. As such, we expect that the Western Cape will continue to outperform the rest of the major markets for the balance of the year."
"It's thrilling to observe the surge in sales of luxury properties, which has markedly bolstered DG's position in the high-end segment of the Cape Town market," concludes Horne.
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