What water issues? Cape Town ranks number two on global luxury property market
Water or no water, Cape Town’s posh property market has not lost its appeal amongst the ultra-rich, according to the latest results by global property consultancy, Knight Frank.
Cape Town’s luxury property market was ranked second on the Prime International Residential Index 100 (PIRI 100), which tracks the value of luxury homes in 100 key locations worldwide.
The PIRI 100 is included in Knight Frank’s Wealth Report which provides the global perspective on prime property and wealth.
In the report released on Thursday the company states that in 2017, Cape Town’s luxury residential market outperformed the city’s wider mainstream market by some margin.
Cape Town’s luxury property prices increased by almost 20% in 2017 well above cities such as Aspen (19%), Amsterdam (15%) and Seoul (13.2%). The Chinese city of Guangzhou leads the rankings, with prime prices up by over 27%.
The Mother City’s most sought after prime residences are in the area near Table Mountain, including the Atlantic Seaboard and City Bowl.
“These attracted strong inward migration from other parts of South Africa, to add to already significant foreign buying activity,” said the report.
But the report notes that both new and existing stock are in short supply.
On average there’s been an increase in real estate investment globally. The global index increased by 2.1% in 2017, compared with 1.4% in 2016.
“This puts Cape Town’s luxury residential market in a prime position within the investment landscape as most UHNWIs (ultra-high-net-worth individuals) want to become global citizens and are looking at acquiring property,” said Knight Frank South Africa MD, Susan Turner.
Besides being a world-renowned business address, Cape Town’s CBD is also coming up as a sought-after residential postcode. The rentals do not come cheap with typical prices for a studio apartment ranging from R1.2-million rand to R30-million rand for a penthouse. A two-bedroom, two-bathroom apartment with secure parking is priced at an average R5-million.
Cape Town still has the advantage against its competitors according to Turner. She said in comparison to other popular destinations such as New York, Sydney or London, the city still had much to offer the global investor, especially delivering on floor space.
Ultra-wealthy growth spike
Other highlights in the report show a remarkable increase in the number of people with net assets worth in excess of $50-million (R59.4-billion) in 2017.
“These “ultra-wealthy” people now constitute a population of 129 730 individuals with a combined worth of $26.4 trillion, a 10% increase from 2016.
“Not only is this a notable increase in a singular calendar year, but it rapidly surpasses the average growth per year recorded over the previous five years; whose cumulative increase was only 18% respectively,” said the company in a press release. .
The number is expected to grow by a further 40% by 2022.
The opposite is happening on the continent where the African “ultra-wealthy” population has decreased by 8 % in the past 5 years in comparison to the global increase. Data provider Wealth-X predicts that this will change and the African population will follow the global trend and the number of “ultra-wealthy” individuals will increase by 31% by 2022..
South Africa is forecast to see a 20% uplift in its ultra-wealthy population over the next five years following a 14% rise in 2017.