Cape Town - Foreigners are continuing to invest in Cape Town’s property market on the back of a weaker rand, the city’s popularity as a destination, and value-for-money houses in the luxury segment of the market.
However, they comprise only a small portion of the luxury property market pie because the biggest percentage of properties in the more than R20 million price range is bought by wealthy South Africans, say residential property experts.
Mike Greeff, chief executive of Greeff Properties, an exclusive affiliate of Christie’s International Real Estate, said foreigners continue to invest in Cape property. The December 2014 Propstats figures indicate that these buyers accounted for 11.6 percent of the City Bowl’s sales revenues last month.
“The allure of the City Bowl is indisputable in that properties offer easy access to the buzz of the inner city and its nightlife, the beaches of the Atlantic Seaboard, and the convenience of MyCiTi transport.”
Greeff said buyers were mainly from Germany, the UK, Switzerland, United Arab Emirates, Australia and Botswana. The average selling price of properties bought by them in the City Bowl was R2.4m.
Greeff said Propstats figures recorded for the Atlantic Seaboard last month showed that foreign buyers were responsible for 12.6 percent of the total sales revenue in this region.
He said for the southern suburbs, 6.6 percent of total sales revenue for the past month was attributed to foreign buyers, with the average selling price R6.8m.
STOCK SHORTAGE
“This was identical to the listing price, which is a symptom of the tremendous stock shortage and high demand for homes in the southern suburbs, where we’re seeing a trend of rising selling prices. Cape Town continues to be a top destination, and with the current drop in the oil price, it’s anticipated that tourism during 2015 will increase, therefore the ground is being laid for sellers to tap into the foreign investment buyer pool. The rand is still at a very attractive rate for anyone earning US dollars, pound sterling and euros.”
Greeff Properties sold a home in Bishopscourt last month to an overseas buyer for R42m.
Ian Slot, Seeff Properties’ Atlantic Seaboard and City Bowl managing director, said foreign buying improved notably over the past year, not only for the Atlantic Seaboard and City Bowl, but for other areas in the Cape metro, including the southern suburbs.
“This is largely attributable to an improved economic outlook in the UK and northern European economies resulting in tourism to the city improving, and to more confidence on the part of foreign buyers to once again invest in offshore property. The continued weak rand being, of course, a boon for foreign buyers.”
Slot said about 14 percent of all properties that sold in the area were bought by foreigners, amounting to just more than R1 billion, representing about 20 percent of the rand-value sales there.
MOST FROM EUROPE
“About 60 to 70 percent of all sales were made to UK and northern European buyers, while about 15 percent of sales were made to African buyers. We expect the UK and northern European buyers to remain the biggest foreign buyers of property, at least for the next three years.”
Slot said the majority of sales to foreigners were less than R8m, and of the 44 recorded sales, more than R20m for the Atlantic Seaboard and City Bowl, only seven (15 percent) were to foreigners.
Of the sales, five more than R20m were to UK buyers, one to an Australian, and one in Fresnaye for R30m was to a buyer from Mauritius.
“The highest prices were also paid by South African buyers, not foreign buyers,” said Slot.
Rainer Kloos, property consultant for RE/MAX Living, said that last year foreign buying increased by 15 percent of all sales along the Atlantic Seaboard, City Bowl and Hout Bay.
GREENER PASTURES
“The reasons are the usual obvious ones – a weak South African currency and an increase in foreigners seeking greener pastures in South Africa. One myth is that foreigners do not pay more for properties, they often have more to spend. On the contrary, foreigners are more circumspect, come extremely well prepared and are no ‘pushovers’.”
Basil Moraitis, Pam Golding Properties’ area manager for the Atlantic Seaboard, said there has been an influx of international property buyers in the area. “We are encouraged by the international buyers who are here and confident this will be a good season.”
He said, however, that buyers over the recent holiday season were mostly South African, with a strong local contingent, and that Joburg buyers in November/December continued to be the main driver of “non-local” interest.
Cape Argus