International property investors, particularly Europeans, have spent over €21.9million on homes on the Atlantic Seaboard of Cape Town.
The Atlantic Seaboard, known as Cape Town’s ‘Riviera,’ boasts South Africa’s most expensive real estate. Investors from the UK and Europe are now looking at high returns on their investments with the substantial devaluation of the local currency since the beginning of 2014.
A survey of all free-standing house sales in the past 18 months that gives a comprehensive snapshot of precisely where buyers originate and how much they spent.
The survey also demonstrates the extremely high value of property in the area – just 13 house sales in the exclusive suburb of Bantry Bay over the 18-month period, for example, resulted in €12million changing hands.
Mainland European buyers made up 12% and purchased property for €13.8million and the United Kingdom accounted for 7% for the buyers, spending €8.1m.
A number of the sales since the beginning of the year have been driven by the substantial depreciation of the Rand, which continues to make Cape Town an even more attractive international investment prospect. If you’re buying in Euros or Pounds, you’ll get far more for your money in Cape Town than you would in most sunny places in Europe.
Cape Town was ranked as the top holiday destination for 2014 by British newspaper The Guardian and the US’s The New York Times.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, says mainland Europe remains a significant international source market for property sales on the Atlantic Seaboard.
“As far as the European countries are concerned, French buyers are tops with 31% of the region’s spend, which translates to €4.3m in sales. Next is Switzerland at 16% buying property worth €2.19m, followed closely by Belgium at 15% (€2.16m) and Germany at 12% (€1.61m).”
Geffen says the remaining 26% of mainland Europe’s buyers come from Denmark, Italy, Sweden and the Netherlands, and they collectively spent €3.5m.
“There’s no doubt, looking at those figures, that Cape Town is not only a desirable holiday destination, but that we’re also an immensely attractive investment prospect for foreigners who want to come here again and again, or for those looking for a retirement destination.”
Brendan Miller, Lew Geffen Sotheby’s International Realty Principal on the Atlantic Seaboard, says Camps Bay accounts for the greatest number of sales – 74 houses changed hands in 18 months at a cost of €44.7m.
“Houses in Camps Bay and Fresnaye tend to be older builds, often on large pieces of ground. Most are bought to renovate or demolish to make way for entirely new, bigger and more modern houses.”
Geffen says an analysis of the sales bears this out: “In Avenue Des Huguenots, Fresnaye, a property was bought for €224,717 during 2005 and sold during 2013 for €1.43m showing a nominal return on investment of 26% per annum over 8 years.
Miller says the price bands of sales over the past 18 months also make for very interesting reading, because while the greatest number of sales was in the lower ranges, the greatest Rand value came from the higher-end properties.
According to Miller, the highest volume of sales was generated in the €340,480 to €680,960 bracket; 88 properties worth €43.14mchanged hands.
“The days of ‘flipping’ properties at huge profits are mostly over for now, but investors are happy to buy the best land, renovate and then live in there for a few years while their investment grows.”
Geffen believes the Atlantic Seaboard is likely to stay out of step with the remainder of the South Africa property market for the foreseeable future.
“If as a seller you can demand €7 000 a square metre for a property anywhere else in the country you’d be ridiculed. On the Atlantic Seaboard it’s not only been done, but it’s fairly commonplace. As long as there is demand for properties on the Atlantic Seaboard you’ll see prices keep going up.”