Wealth-X’s first global Alpha Cities Index of luxury investment destinations

Over the past decade Cape Town has accumulated a commanding list of international accolades as a top tourist destination, but the Mother City has another exclusive feather in its cap as one of the top 50 international housing markets favoured by ultra-high net worth (UHNW) individuals purchasing luxury real estate.

Set against the slopes of the Constantiaberg, this exceptional property comprises two architectural masterpieces; a six bedroom main house (pictured) and an expansive five bedroom cottage. Offering the ultimate super-luxury lifestyle, it is being marketed internationally for US$15 million as one estate or $10m and $7m separately. World-class properties such as this are among the reasons Cape Town is such an attractive investment prospect for international buyers, despite being a long-haul destination.  

Wealth-X, in collaboration with Barnes International Realty and Warburg Realty, recently released the “Global Property Handbook” which explores the real estate investment habits of the world’s super-wealthy and includes the first ever “Alpha Cities Index” that ranks the Mother City 37th alongside Norway’s capital Oslo, Basel in Switzerland and the Russian capital, Moscow. It is the highest ranking African city, followed by Johannesburg at 46.

Lew Geffen Sotheby’s International Realty in South Africa specialises in the luxury residential market. Its Chairman Lew Geffen says: “According to the report, global UHNW investors base decisions about where to buy property on a combination of practical, emotional and financial reasons and the most desirable locations are those that tick the highest number of boxes in all three criteria.

“In Cape Town, foreign interest is driven by numerous factors, including the weak Rand that affords offshore buyers excellent value compared to most European destinations and similarly cosmopolitan Southern Hemisphere cities like Sydney in Australia where comparable properties are ten times the price.

“Cape Town’s temperate climate also offers an idyllic respite from European winters while its unique synthesis of lifestyle, scenic beauty and world-class amenities, including a growing reputation as a global gourmet capital, meet even the highest expectations and cater to most needs.”

Geffen adds that the Mother City measured up well to the most influential of the criteria – the emotional factors – that range from the exclusivity of the area and positioning of the home to the desirability of the immediate surroundings and proximity to top class restaurants, bars, cafes and retail experiences.

It is no surprise then that almost all of the nearly 100 Cape Town properties listed on the global Sotheby’s International Realty website are situated on the Atlantic Seaboard or in Constantia and Bishopscourt.

Joanna Thomas, Select Area Specialist for Lew Geffen Sotheby's International Realty in Constantia Upper, says that families, especially, find Constantia appealing because of the unique lifestyle offering as well as the generous plot sizes.

“Although only 20 minutes from the CBD, the historic tree-lined suburb boasts gracious homes with expansive gardens. It offers country living in a spectacular setting of lush vineyards, rolling hills and rural farmland against the backdrop of Table Mountain, yet it’s essentially in the middle of the city.

“Constantia is also home to abundant protected greenbelts, so it’s the ideal location for people who enjoy sports and the outdoors, offering hikers, cyclists, runners and equestrian enthusiasts myriad trails and breath-taking scenery.”

Thomas adds that another significant draw card is a comparatively low crime rate due to collaboration between the community, the Constantia Valley Information Centre and a special response team that works closely with Wynberg’s police – all backed up by an extensive camera network.

This striking and unique villa in Camps Bay on the Atlantic Seaboard in Cape Town is artfully designed with a north-facing aspect, suspended over the ocean with unsurpassed sea and mountain views. Merging technology with natural beauty it boasts cutting-edge home automation, a sound-proof cinema, private elevator and garaging for seven vehicles. It is on the market for less than US$3.5 million.

Rouvaun McKirby, partner Area Specialist to Thomas, says: “We have just listed another exceptional Constantia Upper property on the Sotheby’s International Realty global website that perfectly illustrates why Cape Town attracts buyers in the UHNW bracket.

“This exclusive north-facing estate is set against the mountains on 3.5 sprawling hectares overlooking the Constantia valley, with its closest neighbours barely discernable through the trees.

“It comprises two luxurious homes; a six-bedroomed main house and a five-bedroomed, glass-fronted ‘cottage’, each with its own swimming pool and garaging. The Midden and the cottage can be acquired separately for US$10 million and $7m respectively, or together for $15m as an expansive family estate.”

McKirby explains that the designer estate has broad appeal and in addition to keen interest from European investors, their office is also fielding enquiries from Russia, China and Dubai.

International buyer interest in the estate isn’t surprising, says Geffen, if one compares the value to a similar destination in the Alpha Cities Index.

“São Paulo in Brazil comes in five places below Cape Town at Number 42 on the list. Brazil is also a developing nation, it is long-haul and is located in the Southern Hemisphere, so it’s attractive to ‘swallows’ who want to follow the sun. But when it comes to bang for buck, Cape Town leaves São Paulo in the proverbial dust.

“You can buy an incredible 11-bedroomed, two-house estate in Upper Constantia for $15m or a state-of-the-art six-bedroomed villa in Camps Bay with 360-degree ocean and mountain views for less than $3.5m, but shows that in São Paulo you’ll need to cough up around $20m for a four-bedroomed secure estate or more than $9.5m for a relatively plain three-bedroomed home. You can’t even begin to compare the value or the return on investment between the two cities; in international terms it’s a no-brainer.”

Although plot sizes along the Atlantic Seaboard are a fraction of those in the Constantiaberg, the area’s elevated oceanfront position liberally dotted with architectural masterpieces has long appealed to foreign buyers and earned it the reputation of the “Monaco of the South”.

Geffen says: “The prestigious strip from Llandudno to Bantry Bay offers an exclusive, world-class lifestyle at a fraction of the price of comparable locations elsewhere in the world.

“Investors are spoilt for choice when it comes to properties, from luxurious lock-up-and-go apartments and penthouses to superb villas that boast wine cellars, games rooms, cinemas, gyms, saunas, expansive reception areas and state-of-the-art fittings and security.

“Residents are also just a short walk or a minute’s drive away from pristine Blue Flag beaches and gourmet restaurants and cafes.”

In contrast Johannesburg’s placement on the Alpha Cities Index is driven by more practical reasons than Cape Town’s attractions, which is reflected in its ranking nine places lower than the Mother City, according to Geffen.

“Most international investors buy in Johannesburg because it’s still the financial powerhouse of South Africa and if they’re going to be seconded there for an extended period or they frequently conduct business in the city, then purchasing property makes sense.

“Suburbs such as Sandhurst, Bryanston and Illovo are popular choices and exceptional properties can rival Cape Town in price, but on average they are cheaper. Top of the essentials list for every UHNW foreign buyer in Johannesburg is security, though. If a property isn’t entirely secure, it won’t easily attract international interest.”

Not listed in the Wealth-X report but still drawing extensive attention from international UHNW investors are the Winelands and South Africa’s Millionaires’ Playground on the Garden Route, Plettenberg Bay.

According to Chris Cilliers, CEO and Principal for Lew Geffen Sotheby’s International Realty in the Winelands, most foreign buyers there are European with the majority being German, Dutch, Swiss or UK citizens. The primary appeal is the spacious, quality country lifestyle.

“We are still seeing strong demand from UHNW international investors and don't envisage a significant change in the year ahead. In fact we have a shortage of super luxury stock in the Winelands.”

In recent years, a number of the most prominent, established wine farms have been sold to foreign investors and the Lew Geffen Sotheby’s International Realty office in Stellenbosch is currently concluding the sale of a wine farm to UK buyers.

Steven Neufeld, Manager Principal of Lew Geffen Sotheby’s International Realty in Plettenberg Bay, says: “The number of foreign sales we’ve concluded has increased annually since 2012 when only 3% of our buyers were foreigners.

“Currently 13% of all our sales are to international investors, most being swallows hailing from Europe, but we’ve also sold a number of properties to buyers from Middle Eastern and African countries.”

Neufeld adds that his office is fielding an increasing number of queries from expats who want to purchase property in the town as investment and holiday homes with potential for retirement or moving back to South Africa at a later stage.

Geffen concludes: “The fact that Cape Town has been listed as one of the top cities worldwide on the Global Cities of the Future winners 2016/17 for foreign direct investment (FDI) strategy will further boost foreign investor confidence, especially in the face of the current political turmoil in much of the northern hemisphere, and global economic uncertainty.

According to fDi Intelligence, a division of the Financial Times, Cape Town has also been ranked 21st for its FDI strategy and is the only African city listed in this category by fDi Intelligence. Other cities noted include Edinburgh, Hong Kong and Chicago

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