The property advertisement described the flat on show in Sea Point as “neat”, which is estate agent-speak for “matchbox-sized”. It has a lingering aroma of boiled cabbage, and a glimpse into the apartment opposite reveals neighbours who appear to be running a crack den. This flat costs almost R2-million.
Look into the windows of an upmarket estate agency in Cape Town and you’ll see properties listed for millions. That’s nothing new. What is new, however, is just how many millions.
“In Cape Town we’re seeing a trend where you can see properties selling in the R40-, R50-, R60-millions up to R125- or 150-million, and people aren’t going: ‘What, are you mad?’ ” says Seeff chairperson Samuel Seeff. “That’s now become an expected norm.”
Seeff is not exaggerating. Do you have R150-million burning a hole in your back pocket? If so, there’s a Clifton property with your name on it. It’s ideally suited for people who believe they can never have too many rooms in which to laze on a couch, because you get five of those. One is a “pyjama lounge”: silk only, one assumes.
Then there are the luxury touches you’d expect for that price tag: a temperature-controlled wine cellar, a gym, a heated swimming pool and a built-in surround-sound system. You’ll live in a secure, highly exclusive estate. On the downside, your rates and levies are more than many people pay for rent: R15 800 a month.
That property is being advertised by then Dogon Group, which recently unloaded the most expensive house ever sold in Africa. At R290-million, the Bantry Bay residence went for almost R50-million more than the bill for President Jacob Zuma’s Nkandla security upgrades. The sellers threw in some art, the furnishings and two luxury cars to sweeten the deal.
The Bantry Bay sale was unusual for two reasons. For one, it was the first Cape Town property to sell for more than R100-million, though a number of other houses have been advertised above that price. For another, it was bought by a German couple. Despite the widespread perception that it is rich foreigners snapping up the fancy homes, estate agents say that this is not the case.
“Our buyers are overwhelmingly local,” says Seeff, who estimates that international buyers make up only 10% of those purchasing Cape Town houses. “Since 2008, the notion of owning a home in a foreign destination is not as attractive as it used to be. These days, [international buyers] would rather invest money and stay in nice hotels and B&Bs.”
Who are these moneyed locals with millions to shell out for Cape Town’s swankiest properties? “There’s a lot of buyers from suburbs like Somerset West or Worcester who want to have a place in town,” says Re/Max agent Steven Delit.
Pam Golding’s records have shown that up to 40% of buyers Atlantic Seaboard properties are from Gauteng.
Delit produces a monthly newsletter in which he records the sales trends for the sea-hugging suburbs stretching from Mouille Point to Hout Bay. In May, the least expensive flat sold along the coastal strip was a 53m2 one-bedroom abode in Sea Point that went for R1.195-million.
These steep prices are what you pay to live on the Atlantic Seaboard. The same price elsewhere in Cape Town could get you 300m2 in Marina da Gama, or 516m2 – and two extra bedrooms – in Athlone. In Brooklyn, that price would buy you a house with four bedrooms, each with its own bathroom.
In Cape Town, the old estate agent cliché of “location, location, location” still rules supreme.
“This afternoon, I’m showing a Saudi a R30-million house in Bakoven,” Soukop property consultant Susan Hammerson said. “If you took that house and put in Parow, it would be a R3-million house.”
Asked what justifies the property’s price tag, Hammerson shrugs. “It’s right on the sea,” she says. “Nothing can spoil that view.”
The most expensive suburb in Cape Town is Camps Bay, according to data released in June by wealth intelligence company New World Wealth. In that area – home to the likes of former Agang leader Mamphela Ramphele – house prices have gone up by 50% in five years.
The reason? The basic economic principle of supply and demand. “There’s no more land near the water,” Delit says. Seeff puts it another way: “The greater the scarcity, the more the expense.”
There’s another tenet at play here too: the greater the proximity to mountain and sea, the greater the expense. Atlantic Seaboard properties are shadowed by Table Mountain and lapped by the sea.
Old-money suburbs such as Constantia Upper and Bishopscourt are also seeing spiralling prices. Pam Golding is selling a four-bedroom Constantia Upper house, complete with boardroom for the family business, for R115-million. Rates are an eyewatering R20 742 a month.
On a milder scale, Seeff says the suburbs with closest proximity to the City Bowl – “Vredehoek, Oranjezicht, anywhere under Table Mountain” – have also become expensive. To get your hands on more affordable properties, he suggests you look at areas such as Blouberg and the northern suburbs, where battling the traffic into town each day can be a monstrous headache.
The rapid appreciation in value of coastal properties can provide its own headache for those who want to move elsewhere, Hammerson says. She cites the example of a client who bought a Sea Point flat for R1.5-million in April. Just three months later, the property is now valued at R2.3-million.
“But if she wants to sell it, what’s she going to be able to replace it with?” Hammerson asks. “Now, for that price, she’ll have to move out to somewhere like Milnerton or Pinelands.”
The Cape property market is outperforming most of the country by a substantial margin. There are only a few enclaves in KwaZulu-Natal and Gauteng that can compete. In Durban, Umhlanga and La Lucia are home to numerous R20-million-plus properties.
“In Johannesburg, we’re seeing fewer and fewer properties valued above R25-million,” Seeff says.
If you ask estate agents why Cape Town’s property market is so dominant, you’ll get a number of standard answers.
One is “semigration”: people relocating to another part of the country. In May, Sotheby’s International Realty said more than 30% of its clients selling their Gauteng properties wanted to move to the Western Cape. The influx of arrivals from other provinces creates a demand for Cape Town property, which pushes up prices.
The answer to the question of why Cape Town has become a desirable location is one that inevitably strays into political terrain.
“The issue is that, frankly, there’s a very strong belief that the Western Cape, because of infrastructure, politics and tourism, is the place to be heading in South Africa,” Seeff says. “It’s a show of confidence in the way the DA [Democratic Alliance] has run the province. If you make your investment there, it’s likely to hold value. The same, frankly, cannot be said for the rest of the country.”
Delit also cites confidence in the Cape Town property market as the primary reason for its appeal.
“Property, you can’t move,” he says. “If things go bad in South Africa, you can move your car out, you can move your diamonds out, but you can’t move your property out. It’s a big vote of confidence.”
Hammerson rattles off a quick list of aspects in Cape Town’s favour: “It’s the most desirable place to live on the continent. There are two seas. It’s the prettiest. And the DA.”
Even the agents profiting off the sale and purchase of property among the wealthy acknowledge that the effects on less-moneyed Capetonians are deleterious. Property research company Lightstone estimates that to afford a house and a car in Khayelitsha on the Cape Flats, a salary of R6 300 a month is required. To buy a car and a beach property in Llandudno at the current median value, you’d need a monthly salary of R389 400.
It’s not just the buying market that is affected. “Rents in Cape Town are now London rents,” Hammerson says.
Research undertaken by internet database Numbeo and released last month found that rental prices in Cape Town were 50.8% higher than in Durban and 22.69% higher than in Johannesburg.
Is Cape Town’s property bubble likely to burst any time soon?
No, property consultants say. They point out that most of the high-end purchases are in cash, so they’re exempt from factors such as hikes in interest rates.
“And Cape Town’s still a quality town to live in,” Delit says.
It helps if you have a lot of money, though.