Between 30% and 50% of the high net-worth individuals (HNWIs) around the world are planning to buy at least one additional luxury property within the next 12 months, compared to just 20% a year ago, according to the latest research conducted by Luxury Portfolio International© (LPI) and Leading Real Estate Companies of the World© (LeadingRE).
In addition, the latest statistics from the US reveal that luxury home sales there have been soaring since September 2020 and are currently almost 61% ahead of where they were at the start of last year – despite the fact that the US has been so hard hit by the Covid-19 pandemic and its economic aftermath. Competition among buyers has also increased and the average listing time for luxury properties has dropped from 82 days to just 55 days, even though the number of new luxury listings coming on to the market has risen by almost 32%.
“Luxury real estate is back in first place among the most favoured investment options for HNWIs, and the reasons are not hard to find.” says Rory O’Hagan, head of the Luxury Portfolio© division of the Chas Everitt International property group.
“For a start, stock markets everywhere have been hammered by the pandemic and are likely to remain volatile as its the economic, social and political effects continue to play out, which makes it very difficult to keep track of the returns on equity investments. And along with gold, real estate has traditionally been seen by investors as a safer alternative in such circumstances.”
Secondly, he says, luxury real estate prices have fallen drastically since 2019, and astute investors are taking the opportunity to upgrade to bigger and better primary residences, or to purchase additional properties in the expectation of excellent future value growth.
According to Andrew Amoils, wealth analyst at New World Wealth and author of the SA Wealth Report, “SA prime residential prices are down by around 20% over the past decade (2010 to 2020) when measured in US$ terms. As a result, SA now offers quite good value in this space.”
“We expect strong wealth growth in the following SA areas over the next decade: Umhlanga, Umdloti, Natures Valley, Hermanus and Franschhoek.”
“We expect apartment living and estate living to dominate the local luxury market going forward,” adds Amolis.
Increased demand for luxury apartments in Cape Town’s Waterfront and Mouille Point
By international standards, Cape Town’s vibrant V&A Waterfront, with its spectacular natural beauty and world-class amenities such as restaurants and leisure activities, together with nearby areas such as Mouille Point, offer accessibly priced residential property close to the water’s edge which represent exceptional value for money, says Mariël Burger, Pam Golding Properties area specialist for the Waterfront and Mouille Point.
Burger says that offering estate living, close to the world-renowned V&A Waterfront, apartments in The Marina are highly sought after. With the current historic low interest rate, these well-priced apartments are well within reach. “We have seen that areas which offer competitively priced properties and an appealing lifestyle, remain resilient. In fact, December (2020) saw a record number of transactions along the Atlantic Seaboard, including the Waterfront area.”
He adds that many sold close to listing price, suggesting that the demand for appropriately, market-related priced real estate remains strong.
A two-bedroom apartment in The Marina recently sold for R8 million – an excellent price considering that this prime-located, secure precinct affords residents access to gym facilities and swimming pools. Pam Golding Properties has just listed a garden apartment, also in The Marina, with views of the canal, for R7.75 million. A Mouille Point apartment, listed for R7.5 million through Pam Golding Properties, offers open-plan living with spectacular sea views.
“It’s not often that we list a well-positioned, well-priced and spacious apartment such as this so here is an opportunity to add value and enjoy the lifestyle that Mouille Point – ideally positioned within easy walking distance of the V&A Waterfront, has to offer,” says Burger.
Meanwhile, a comparable two-bedroom unit in San Francisco’s Marina District is selling for approximately $1.28 million (the current equivalent of approximately R19.275 million), while a two-bedroom apartment in Monte Marina in Monte Carlo will set you back €7 600 000 (current equivalent of an eye-watering approximately R138.133 million).
Recognised as one of the world’s most popular, scenic destinations, Cape Town’s appeal is further enhanced by the fact that many internationally acclaimed architects have contributed to its unique offering of luxury homes, which match the highest standards on the planet – many with exceptional views of ocean and/or mountains, and some with a west orientation which provides some of the most memorable sunsets in the world.
“In recent months we have seen strong enquiries from local, upcountry and foreign buyers looking to invest in secure living on the water, around The Waterfront and Promenade areas. The lower end, up to around R8 million, comprises mainly value-driven investors taking advantage of the weak rand and lower property prices. The larger two and three-bedroom apartments in the higher price ranges up to R15 million and upwards, are often a primary residential purchase – a home to live in, often those moving from a large freestanding home with gardens and security issues to a convenient lock up and go lifestyle. Others are seeking property here to enable them to upscale in size and work from home,” explains Burger.
Burger and his partner, Bridget Shiffer, both award-winning agents with expert knowledge of luxury sectional title property market in the Waterfront and on the Mouille Point ‘Mile’, agree that the allure of a coastal lifestyle is proving to be a strong driver of sales in these areas.
‘Well-priced properties selling swiftly’
Seeff is currently also seeing this scenario play out in all the luxury home markets across SA, from the Southern Suburbs of Cape Town to the North Coast of KwaZulu-Natal, where well-priced properties are definitely selling much more swiftly than they were a year ago. In Johannesburg, for example, we recently sold a super-luxury home in Sandhurst in Johannesburg for R35 million after the price was lowered from R45 million (around US$3m) and another home in Westcliff where the price was lowered in January to R19.75 million from R28 million (around US$1,8m) previously.
“In the past few months, we have also sold a large number of discounted luxury apartments in Rosebank and Sandton to HNWIs who were withdrawing their funds from equity markets, and in exclusive Hyde Park, we recently sold out the units in a brand new upmarket cluster development because they were marked down to 50% of the original asking price,” says O’Hagan.
“And now we are anticipating a similar result in the case of the ultra-luxury Gatsby mansion on Houghton Ridge, which recently become available for sale at R64.8 million – or about 45% less than its original asking price two years ago.”
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“Coastal properties are also a sound investment,” says Shiffer. “Buyers are certainly willing to pay more for the lifestyle they desire.”
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