Dollar millionaires are flocking to Cape Town seeking a sunnier climate and a bang for their buck, according to The Wealth Report 2023, by Knight Frank released yesterday.
The report said the city was currently the 31st place on the Prime International Residential Index (PIRI), moving up a whopping 63 places in the past year from 94th.
The Mother City, as it is known as in South Africa, is increasingly becoming known as a playground for the international rich and famous, while also having seen a rising trend of South Africans moving away from other provinces and semi-grating to Cape Town, lured by its reputation as an area with more reliable utilities and municipal services.
In 2022, between January and December, the Western Cape passed building plans worth R 37 billion, more than any other province in South Africa, including Gauteng. The Western Cape accounted for a third of all building plans passed in 2022, as well as 40% of all buildings completed over the year.
The PIRI 100 tracks movements in luxury prices across the world’s top residential markets and property movements of ultra-high-net-worth individuals (UHNWIs ), who have a net worth of $30 million (R544m) or more.
The report said last year resorts outperformed. Coastal and rural locations in sunnier climes saw average price growth of 8.4%.
Covid-19 had underlined the fragility of life and the need for connectivity, and sparked a mass transition to hybrid working. For the world’s wealthy, this increased their appetite to buy, with 17% adding to their portfolios in 2022.
Monaco held on to its title as the most expensive residential market globally. However, in 2022, the strong currency rewarded the US dollar-based buyer with two extra square metres for their money compared with a year ago.
The report compared relative values of property and how many square metres of prime property you could buy for $1bn in selected cities.
It said for $1bn you could buy 33 square metres in New York, which leapfrogged London (34m²), again due to the strength of the greenback, making it the third priciest city, although the two cities along with Singapore (34m²) were pretty evenly tied.
However, for $1bn you could buy 218m² in Cape Town.
“For real value, head to Cape Town or Sao Paulo where the same budget bestows more than 200m²,” it said.
“For real value, head to Cape Town or Sao Paulo where the same budget bestows more than 200m²,“ it said.
Nick Gaertner, a director and chief operating officer of Knight Frank South Africa said Cape Town “having slipped due to feeling the effects of the pandemic on a Third World country, has again proved incredibly resilient and is once again attracting both South Africans from other territories as well as foreign buyers looking for second homes and to enjoy the beauty, lifestyle and value that the city has to offer”.
He said while the broader South Africa struggles with poor governance, strong leadership in the City of Cape Town had managed to steadily separate it from other regions in the country and develop into a growlingly desirable destination globally.”
While Cape Town was in demand, the rich chose Dubai, (UAE) as their top destination, followed by Aspen (Geneva) and Riyadh (Saudi Arabia).
The PIRI 100 found that average luxury house price growth slowed to 5.2% last year, although with 17% of global UHNWIs buying a home in 2022 this was still the second strongest year on record.
Some 85 of the 100 markets tracked saw positive price growth, led by Dubai (44%) and Aspen (28%). At the other end of the ranking, markets that led through Covid-19 saw big reversals – including New Zealand’s Wellington (-24%) and Auckland (-19%).
Liam Bailey, Knight Frank’s Global Head of Research and Editor-in-Chief of The Wealth Report, shared key insights, saying: “Challenging markets mean the majority of UHNWIs saw their wealth decline last year, with their collective wealth falling by 10% (equivalent to $10.1 trillion).
BUSINESS REPORT