Cape luxury homes cheap at the price

Cape Town - While Cape Town’s luxury housing market has been on the up for over a decade, high-end properties in the Mother City are still cheap by international comparison, according to a new report by Wealth-x and Sotheby’s International Realty.

The report, “Europe, Middle-East and Africa Luxury Residential Real Estate 2015”, found that “ultra-high end” properties in Cape Town were between half and nine times less expensive than similar real estate in Madrid, Dubai and London.

The report’s authors calculated their luxury real estate rankings by comparing the price per square foot of properties valued at more than $1 million (R12m).

Cape Town was found to have the lowest average price per square foot, and the lowest average listing price for such properties.

While a square foot of luxury real estate in London costs a staggering R38 200, the comparable price in Cape Town is just R4 200.

Such luxury properties appeal to super-rich individuals – people who have $30m (R370m and more in net assets – as second homes, holiday homes or as investments).

Laurie Wener, managing director of Pam Golding Properties for the Cape Town metro, said the city was attractive to rich foreign buyers because of its cosmopolitan lifestyle and low cost of living for those with international currencies.

The group had recently sold a luxury Camps Bay property to buyers from Denmark for R22.75m.

Cape Town property was less desirable for investment purposes for foreigners, however. “The soft currency makes serious investment a less attractive option for those with foreign currency,” she said.

Wener said the South African government’s raft of stern new visa requirements, which include unabridged birth certificates for under 18s travelling to the country, were not expected to negatively affect foreign property buyers.

More worrying was the government’s proposal announced in February to ban foreigners from owning farms. While the government’s proposals do not apply to residential areas, Wener said such legislation, even in limited form, “negatively affects sentiment”.

The Wealth-x and Sotheby’s report found that while Cape Town’s mansions are cheap for buyers with millions to spend, there are relatively few super-rich people in the city when compared to the global scenario.

While London has 6 815 such residents, and Madrid 1 315, the Mother City has 155 (as well as two dollar billionaires). In fact, Cape Town easily loses out to Joburg in the super-rich rankings.

A 2014 report by Wealth-x and UBS found that Joburg had 450 super-rich people, almost triple the number in Cape Town.

But this could change, the report’s authors suggest, if Cape Town realises its potential to become a fast growing super-rich hub for Africa.

“The city’s Mediterranean climate makes it an ideal city for those individuals who are looking to combine both an active city life with a variety of outdoor leisure pursuits and fine living.”

The authors point out that the super-rich set won’t miss out on the high life in the Mother City, praising the region’s winelands, golf courses and growing luxury brands and services sector.

The Wealth-x and Sotheby’s report is one of a number of studies released recently to highlight the fact that Cape Town is cheap when compared to international destinations.

A recent global survey by US financial services company Mercer found Cape Town to be the world’s eighth cheapest city for expat employees to work in.