Cape Town: A Foreign Buyer Hotspot
Category The Property Market
Foreign property buyers have long flocked to the sunny shores of South Africa to snap up property in many sought-after suburbs, across major metros in the country. And while there were rumours of a downturn in foreign investments for local property, particularly in 2017, the statistics have shown that this year international investors have returned to the local property market in quite a big way.
Receiving a large portion of foreign transactions in South Africa, Cape Town has remained a strong front-runner in this undoubtedly progressing growing trend. According to recent findings by Lightstone Property, 36% of all foreign property transactions in South Africa took place in the Western Cape province (second to Gauteng, where 47% of these transactions took place).
Finding itself at the top of the purchasing pile, Cape Town’s vibrant atmosphere, metropolitan environment and world-class status are contributing factors to its popularity as a foreign investment destination. Here, properties in the R2m to R3m and R4m price band has experienced the most interest, while there has been a negative growth in the R3m to R4m price band.
Where Foreigners Are Buying Property In Cape Town
The foreign ownership statistics released by Lightstone Property further indicated that there were specific suburbs in Cape Town that has become preferable areas for foreign purchasing. Surprisingly, up and coming locations seemed to outshine neighbourhoods that are generally considered to be luxury residential destinations.
Milnerton has emerged as the highest growth area in the Western Cape, with three of its suburbs leading the pack. Milnerton’s most popular suburbs, where the highest volume of foreign transactions took place, consists of Century City (22%), Sunningdale (18%) and Table View (15%).
While Milnerton was the frontrunner, a few other suburbs in Cape Town also peaked the interest of foreign nationals who purchased property in the Western Cape.
Here is a look at the percentage of foreign transactions in these respective areas:
- Sea Point - 7%
- Rondebosch - 7%
- Observatory - 6%
- Kenilworth - 5%
- Newlands - 5%
- Green Point - 4%
- Tamboerskloof - 4%
- Claremont Upper - 3%
Historically, Sea Point had been one of the most popular suburbs in Cape Town, especially in the previous five years. However, the foreign purchasing activity has declined in this area between 2017 and 2018. This being said, neighbouring areas such as Observatory and Rondebosch have become hotspots for foreign investors, doubling in transactions from the year before.
Why Foreigners Are Investing In Cape Town
Investing in property, in a different country, may seem like a daunting step to take, but there are many reasons why foreign investors have been snatching up property in the Mother City.
Exchange Rate
The favourable exchange rate between many other countries and South Africa makes investing in property locally appealing to foreign buyers. Taking into consideration that the US Dollar, Euro and Pound are all more than 14 times stronger than the rand (as 20/09/2018), it makes purchasing property in places like Cape Town ‘a steal’ in comparison to their countries of residence.
High Demand
Cape Town has long been the most desirable residential destination in all of the country. This is largely due to its first world landscape and infrastructure. The demand for property in this area has made investing in Cape Town highly lucrative, as there is a constant need from buyers.
On top of this, rentals are also very sought-after, creating an opportunity for real estate owners from other countries to turn their purchases into investment properties, that will yield monthly returns and profits.
If you are a foreigner, deciding whether you should invest in Cape Town property Knight Frank is the leader in foreign real estate investment in South Africa. Contact us for more information on the local real estate transaction and how to secure the perfect investment property.
Author: Knight Frank
