Depending on your perspective, now may be the best or worst of times to be in the market for property in Cape Town.
2008 saw a sharp decline in real estate values in Cape Town, driven primarily by the economic effects of the 2007 to 2009 global recession, which left a great many people looking to cut down on living expenses.
The result has been a flood of homes coming onto the market, homes ranging across just about every area and price bracket. With supply so drastically exceeding demand, Cape Town’s market became a buyer’s market, resulting in reduced public confidence in the value of local real estate.
The flip side of this, for some investors, is that since relatively few people are competing to invest in real estate, the present moment presents an opportunity to snap up amazing homes at far lower prices than their former (and potential) market value. Areas in which a return to high levels of value seems inevitable include the Atlantic Seaboard areas such as Camps Bay, Clifton and Llandudno – there’s simply nothing that can compete with their incredible natural surroundings, and new developments in these areas continue to be built. With their mix of super-modern and classical architecture, the upmarket suburbs of Cape Town’s City Bowl, including Higgovale and Oranjezicht, are similarly unlikely to see any long term fall in the value of their real estate, as are the green, hillside regions of Constantia.
Properties in City Bowl also represent great potential for immediate return on your investment. The upcoming 2010 World Cup is predicted to bring no less than 450 000 visitors to Cape Town, many of whom will be Americans and Europeans willing, due to the favorable exchange rate, to pay unprecedented rates for accommodation. At the very least, it would be enough to pay off a couple of months of your bond.
You can visit http://www.thepropertymag.co.za for regular articles detailing the latest developments when it comes to Capetonian and South African real estate.
Generally speaking, the rental and sales markets tend to run counter-cyclically to one another, a tendency that’s been borne out with the latest developments in Cape Town. As mentioned above, due to financial pressure, many home-owners have been forced into the rental market. In addition, more landlords, facing similar economic hardships, are looking to cash in on their holdings through selling rather than renting.
The result for the rental market has been demand exceeding supply, especially when it comes to medium cost houses and apartments in the more attractive parts of the city. This has led to landlords opportunistically raising their prices (though only by a matter of five to ten per cent on average), and prospective tenants having to compete more vigorously than usual when it comes to landing the best accommodations.
So while, legally, renting an apartment in Cape Town is a simple business (you’ll rarely need more than your ID and 3 months of bank statements), you will have to be on your toes when it comes to finding that seaside villa, mountain retreat or inner-city apartment you’ve been wanting. This is not to say that there aren’t great deals regularly coming to market. If you combine the use of online resources (such as those suggested in the ‘Finding a home’ section), trawl newspaper classifieds and let rental agents know what you’re looking for, you’ll likely find that you’re well on your way to nabbing the perfect abode.