Despite the challenging conditions brought on by the pandemic, South Africa’s property development market has remained resilient. With the country experiencing the first post-pandemic interest rate hike in November 2021, and a subsequent one in January 2022, a slowdown of movement in the market was predicted. But new data from Stats SA shows that building plans passed for residential developments in the Western Cape have increased by 22.2% year-on-year to a value of R15.4 billion in 2022 – while plans completed over the same period in the region increased by 21.6% to the value of R9.2 billion.
Growth in sales along the Atlantic Seaboard is a clear indication that even though the country has faced geopolitical instability, investors are still seeing the benefit of making long-term property investments in the “Riviera” of Cape Town – the band of suburbs located between the Table Mountain range and the Atlantic Ocean on Cape Town’s western coastline. In fact, the Western Cape has been touted as one of the most exciting emerging markets globally.
A trend that is driving growth is the return of an international market. 2010 Soccer World Cup fever set off a seaboard property boom which peaked around 2015 and has plateaued since. But now the Western Cape is once again leading the market with sales of luxury, or trophy homes valued at more than R20 million, fetching close to R3 billion in the first nine months of 2022. Approximately 80% of these sales have been in the suburbs of the Atlantic Seaboard, especially Camps Bay, Clifton, Bantry Bay, Fresnaye, and the Waterfront.
Semigration – or the ‘zoom boom’ – is also showing a revival and is set to become more of a market driver in 2023 with buyers from inland cities increasingly making the move to coastal areas that are geared towards a slower, safer, quality lifestyle, with municipalities that are typically better run than those in other parts of the country.
For those who don’t want to or are unable to make the physical move down to the coast, we are also seeing the semigration of investment as more buyers seek to invest in an area that is showing such massive growth potential.
Whatever the reasons may be, buyers are searching for properties that range from trophy homes to oceanside apartments, and everything in between across the Western Cape which bodes well for the property developers’ market in 2023.
A prime example of an area of growth for the region is Seapoint, which is developing into more than just a daytime paradise and night-time party place. The area is becoming increasingly popular for those looking for connected living spaces which will certainly play a pivotal role in shaping the buying market in 2023. The evolution of property development that extends living spaces beyond the front door with expansion into bustling restaurant-lined streets, beach-side walkways, outdoor gyms and green spaces, for example, is becoming an extremely attractive drawcard for buyers across the board – from seasoned investors to young up-and-comers, all the way to empty nesters.
Of course, the interest rate is also going to be a key factor that shapes the buying market. The pressure for developers will be managing the input cost of their properties and their inflationary experiences as inflation rates readjust to be more in line with historical trends.
Overall, the sentiment around the market for 2023 is one of positivity and optimism. Yes, there are challenges to be faced, but if one takes a pragmatic look at the potential of the region, it is undeniable that the incredible natural assets, urban parks and exquisite promenades are world class, and offer excellent capital growth and return on investment. It is now up to local government to ensure that strategies for growth are successfully put in place to meet the demand of a market perfectly primed for purchase.
