Cape Town’s Atlantic Seaboard is witnessing extraordinary capital growth, presenting homeowners with remarkable returns on investment properties, Cape {town} Etc reports.
Also read: The Galileo’s Halloween Shows offer spooktacular fun for the whole family
A recent report highlights that rental prices in this region are approximately 15% higher than in other parts of South Africa, with a growth rate of 9.7% per year.
The surge in demand has attracted not only local renters but also tourists, who are now seeking to spend two to four months annually in Cape Town, a shift driven by factors like remote work, the experience economy and the weakening Rand.
Nox Property, a premium residential property management and sales firm based in Camps Bay, reports that as of 1 September 2024, there are 11 392 active listings in Cape Town’s CBD and Atlantic Seaboard market. Over the past year, supply has grown by 17%, resulting in an average Revenue Per Available Room (RevPAR) of R1 910.00, and a market size of around R8.5 billion.
According to Nox Property co-founder Richard Marshall, ‘Tourism in Cape Town has rebounded remarkably, nearing pre-Covid levels. From January to April 2024, air arrivals increased by 13% year-on-year, totalling 405 021, with 91% of visitors coming from international markets. The city’s numerous accolades, beautiful weather, and high-quality attractions make it a prime destination for foreign investors and semigrators from Gauteng and KZN. With a favourable interest rate environment, we expect more buyers to be attracted to the market.’
Check out these budget-friendly offers under R100 000 and cruise through Cape Town in style. Find car listings.
Of the R2.5 billion in Assets Under Management (AUM) across the Atlantic Seaboard, Nox reveals that 1 in 20 buyers intend to occupy their properties, with ownership split between 55% foreign and 45% local, except in Camps Bay where 62.5% of properties are locally owned. Nox commands a 10% market share for property sales in Camps Bay and Clifton, having sold 43 properties from January to June 2024.
The average price of freestanding residential properties was R17 million, with sales ranging from R9 million to R54 million. For sectional title properties, the average sale price was around R9 million, with a range from R2.4 million to R26 million. Properties typically remain on the market for 107 days (sectional title) to 126 days (freestanding).
Marshall notes that properties priced over R20 million are often purchased by foreign buyers seeking lifestyle investments rather than returns. Due to the depreciating rand, capital growth aligns with inflation. Many of these homeowners spend several months each year at their properties, listing them as short-term rentals during their absence. Nightly rates for four-bedroom homes start at R11 000, while five-bedroom homes begin at R22 000.
‘Income from short-term rentals helps cover holding costs like utilities and municipal taxes,’ Marshall explains. ‘Properties below R20 million generally yield a net rental return of 6% to 8%, influenced by the property type and financing structure.’
Short-term letting not only allows homeowners to maximise their investments but also generates income opportunities for those managing the properties, including cleaning staff, chefs, and maintenance workers. Nox employs 172 staff, including 120 housekeepers, contributing around R10 million annually to their payroll and the wider economy. With 200 properties under management, Nox receives about 100 applications from housekeepers each month.
With the possibility of a further 50 basis point reduction in interest rates by November, taking the repo rate to 7.5%, Nox anticipates sustained interest in Atlantic Seaboard properties.
‘Lower interest rates will likely drive property values higher, encouraging investors to purchase properties for rental purposes. Until there’s clarity on short-term rental regulations, we don’t foresee a slowdown in this market,’ concludes Marshall.
Cape {town} Etc discount: Looking for things to do in the city, at half the price?
Also read:
World Mental Health Day: Support Waves for Change with a sea immersion
Picture: Supplied
