Weekend Argus (Saturday Edition)
Western Cape remains excellent investment opportunity
THE CAPE’S property market has outperformed the rest of the country over the past five years, and even though price growth has slowed, the region remains an excellent proposition for buyers and investors.
While the province’s property market will be affected by the drought, Paul French, commercial director for the Coastal Property Group, says the crisis will not last forever.
The resilience of the Cape’s property market is due to several factors, including tourism, foreign and African buyer demand, semigration, and retirement demand.
The region’s rental demand and capital value growth is also behind its success.
Cape Town’s location on the coast means it is ideal for tourism, and the city works hard to grow this sector, French says. This brings demand for holiday and second homes as well as for holiday lets, which in turn boosts the buy-to-let market.
“Despite the drought, international tourism arrivals increased year-on-year in December by 11.5%.”
The region also remains a favourite with northern Europeans both for second homes and holiday purposes, bringing people from the United Kingdom, Germany, the Netherlands and other Benelux countries along with visitors and property buyers from across the world.
French says Cape Town is popular for northern hemisphere people to escape their cold winters. The Cape is also popular with retirement buyers from Europe.
“Many expats continue investing in property in the country, and much of this is into Cape property. Similarly, Cape Town is an attractive holiday and property invest- ment destination for wealthy Africans, and this is a growing market.”
Semigration and
retire- ment demand for homes has been driving up price growth, and this influx to the Cape is likely to be hampered only by the inability of people from upcountry to sell their properties.
“The desire remains high to move to the Cape for a variety of reasons, including the lifestyle and better quality of life, especially for families with young children.”
Cape Town’s active longterm rental market provides a further boost for the buy-to-let market, French says, attracting the highest rental returns in the country. It also seems to draw better tenants, according to recent rental barometers, and this is certainly an incentive for property investors.
In addition, French says FNB reported last year that property prices in the Cape metro increased by 40% to 100% over the five-year period to early 2017, and by 300% to 700% over the past 15 years.
“Measured on an average basis, this is well above any other area in the country including the upper income areas of Joburg, Sandton and Pretoria East. “Lastly, despite the reputation for being more expensive, the Cape really does offer something for everyone. There is a wide choice of sectional title, security and lifestyle estates, and you can choose whether you want an urban, suburban, coastal or country lifestyle.”