Why You Should Be Investing In Cape Town Property
Category Property Advice
On the back of Finance Minister Enoch Godongwana's maiden budget speech, we look at why investing in property in Cape Town is still a no-brainer, despite a slightly grimmer economic outlook nationally.
Godongwana's speech provided relief on several fronts, with the decision to keep taxes unchanged, in particular, benefitting South Africans.
Cape Town has long been seen as an ideal city to invest in, and while the real estate market did go through a slight slump through 2018 to mid-2021, there were strong signs of an uptick late last year with the lure of Cape Town's lifestyle and a number of other factors combining to create favourable conditions in the market.
The Cape Town Lifestyle
The lure of the Cape Town lifestyle has always been strong, with the Atlantic Seaboard, in particular, seen as a prime location for investment properties.
Running from the iconic V&A Waterfront to the secluded and exclusive beaches of Bakoven, the Atlantic Seaboard is one of the most sought-after areas in the Mother City. A combination of urban cool and jaw-dropping views, it really is the prime real estate in the city.
With the deep blue waters of the Atlantic Ocean lapping on its doorstep and with Lion's Head and the Twelve Apostles providing a stunning backdrop, you would be hard pressed to find a more aesthetically pleasing place to call home. This, in turn, means investing in property in the area is a very sound decision, with the opportunity for a passive income through high rentals and high resale values a reward for savvy investors.
"Cape Town is still an incredibly attractive option when it comes to investment properties," says The Agency's Managing Director, Kyle Leigh of the current climate.
"It is still one of the best creators of wealth and we have seen with an uptick in semigration and the remote work opportunities that Cape Town is very viable for those looking to make the move.
"Areas like Bantry Bay and Sea Point, and all the way through to the Waterfront, in particular, are hot property for those looking to invest in property in the city."
Southern Suburbs also in demand
While the Atlantic Seaboard - and the Waterfront developments - are always in demand and considered prime investment opportunities, the Southern Suburbs also continues to tick all the right boxes.
The Southern Suburbs is a very appealing option for buyers - and leasers - with plenty of reasons to make the move, with an exemplary lifestyle and incredible value chief among them.
The Southern Suburbs has a number of attractive opportunities. Arguably the biggest reason is the incredible lifestyle it offers - it's in close distance to the mountain, beaches, sporting facilities and top restaurants.
Semigration and schooling is also a factor in the decision-making process for the Southern Suburbs, with a strong rental drive as parents look to place themselves in catchment areas for the schools in the area.
The stability of the area is also a major lure for buyers, with the Southern Suburbs market seeing great results, often in spite of national trends or events.
There is excellent capital growth and return on investment in the area, which has shown great resilience, even when other parts of the country are facing challenging circumstances. The huge demand for properties to buy, and rent, continues to drive the property value upwards.
There is also a wide variety of properties on the market, ranging from large estates in Upper Constantia and Bishopscourt to the lock-up and go and secure estates throughout the area, the latter of which are becoming increasingly popular for buyers and rentals.
Return on investment
The passive income to be earned on an investment property by way of rental is also a good reason to invest in Cape Town property.
The rental market is certainly starting to show significant signs of life, with most new arrivals in Cape Town looking to rent before entering the market as buyers. Luxury rentals, in particular, have shown strong signs of growth, with tenants looking for bigger properties, with plenty of space to set up work areas, and outdoor areas playing a key role in their decision making.
Leigh says that it is the combination of factors - lifestyle, semigration and the strength of the real estate market as a whole - that is leading the resurgence in the Cape Town rental market.
"With all of these factors in mind, we have seen since as early as August last year, that the rental market was starting to show signs of a resurgence, with it really starting to pick up again in December," says Leigh.
"While this, of course, means that the yields on your investment will also be better in the long-term, it's the lure of the Cape Town lifestyle and its ability to attract foreign interest that will ultimately lead to greater capital growth in the long run."
"If we take a long-term, global view, Cape Town property is still, in many respects, very much undervalued."
Author: The Agency Property Group
