Foreign investors eye South African entry level luxury homes

Today’s world of international luxury property begins at an entry price of US$1-million, according to London-based Christie’s International Real Estate.

“At that level, current prices of South African luxury residential property are a ‘snip’ for foreign investors right now – and not least in Johannesburg,” says Ronald Ennik, founder and CEO of Ennik Estates.

4 Bedroom House for sale in Camps Bay, Cape Town

He bases this view on the latest global luxury property report by Christie’s, which has a network of 125 affiliated real estate brokerages in 44 countries – with Ennik Estates as its exclusive affiliate in Gauteng

Titled “Luxury Defined: An Insight into the Luxury Residential Property Market”, the report provides an in-depth analysis of trends that are shaping the high end of the global real estate market in 2014 (after boom conditions during 2013). 

“It shows that the entry point for luxury property in Cape Town is now $1-million (R10,3-million), compared with $7,8-million (R80,6-million) in London, which tops the Christie’s worldwide entry price line-up,” says Ennik.

Other benchmarks listed are New York and Los Angeles, with entry prices of $5-million; Sydney and Singapore ($4-million); San Francisco ($3-million); and $2-million in Miami, Toronto, Paris, Côte daze, Hong Kong, Rio de Janeiro, and Dallas.

Johannesburg/Sandton attractive

“Given that luxury home prices in the best areas in Gauteng generally track slightly behind those in Cape Town, it is quite clear that Johannesburg’s Northern Suburbs and Sandton (South Africa’s business hub) now offer attractive opportunities to foreign investors in our real estate market,” says Ennik.

“However, it is not only price that drives the process but also socio-economic and socio-political perceptions – where, unfortunately, the country has been falling short over the past five years. 

4 Bedroom Cluster for sale in Melrose, Sandton

“If the ANC and the Government get their post-election ducks in a row – not least by a return to good governance; stamping out corruption; and restoring confidence – the outlook for foreign investment in our luxury property market will brighten,” says Ennik.

Key contributors

Other findings of the Christie’s report include

The emergence of three distinct buyer categories as key contributors to the surge in global luxury market sales – local buyers at the entry level; millennial buyers (born after 1980); and overseas buyers
The luxury home markets that have rebounded the strongest worldwide are in urban centres – although prized resorts have begun to see some of the recovery
There was robust global growth in the number of $1-million-plus sales during 2013
As the number of wealthy individuals in the world grew to its highest-ever level in 2013, so too did the pool of potential buyers of luxury homes.

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