South African property prices, particularly the prime residential areas of Cape Town, are trending along the same lines as many other countries in the world, but Dubai in particular could be used as a comparison, as seen in the latest Knight Frank Dubai Prime Residential report issued this month.
Since seeing an all-time low in property prices in 2011, Dubai property prices made a remarkable recovery and has maintained this, not dissimilar to South Africa, said Lanice Steward managing director of Knight Frank Residential SA.
Dubai’s price growth decelerated from 4% last year to a current figure of 1% quarter on quarter, Cape Town’s prime residential property prices in similar areas and categories (Atlantic Seaboard, southern suburbs of Cape Town and the City Bowl) have increased by 0,95% quarter on quarter, according to Knight Frank Residential SA’s figures for the last quarter, she said.
“We are experiencing a similar phenomenon to Dubai where sellers are expecting the value of their homes to have risen more than the market will allow and being non-negotiable on pricing, which is resulting in buyer and seller expectations not aligning,” said Steward.
“The reason we have chosen Dubai as a comparison is that, in terms of the amount of property that can be bought for US $1 million, Dubai is 19th on the list of what can be bought for that amount at 146m² and Cape Town is 20th at 215m² for US $1 million. The highest luxury property pricing is in Monaco where US $1 million gets you 15m²,” she said.
Like South Africa, Dubai property attracts a number of foreign investors. These buyers are predominantly from India, at a figure of 17,4%, 9,3% from the UK, 7,1% from Pakistan, and 25,2% of the volume comes from a mix of other countries, according to the Knight Frank report.
“Cape Town property is not expensive in comparison with the rest of the world but it does offer much of the same standard of living as many of the countries mentioned in the report. With the exchange rate currently sitting at a level of R10,68 to the dollar, SA property will continue to be in the running as an attractive investment proposition for holiday homes and “swallow” retirement properties,” said Steward.