Johannesburg may be home to over 23 000 millionaires, but Cape Town with just over 9 000 millionaires continues to attract a high number of local, African and international luxury home buyers.
This seven bedroom home in The Glen in Camps Bay was sold by Pam Golding Properties in May 2013 to a buyer from the DRC for R20 million.
According to WealthInsight data, the number of millionaires in South Africa reached 48 800 at the end of 2012, an increase of 9 percent over the previous year with Johannesburg accounting for 23 400 of these individuals, followed by Cape Town with just over 9 000.
In Johannesburg, the report reveals that Sandton is the wealthy home buyers’ location with top suburbs such as Sandhurst, Bryanston, Hyde Park and Houghton being the firm favourites.
For those new to the world of the filthy rich, WealthInsight categorises wealthy individuals according to the value of their assets.
These are millionaires, otherwise known as high net worth individuals (HNWIs), referring to individuals with net assets of US$1 million or more excluding their primary residences, multi-millionaires (ultra high net worth individuals or UHNWIs) have net assets of US$30 million or more excluding their primary residences and then of course the super ultra rich, billionaires with US$1billion+.
Of course, the entire country had four in 2012, and these include Nicholas Oppenheimer and family, Johann Rupert, Patrice Motsepe and Christo Wiese, according to WealthInsight.
There were an additional 158 centi-millionaires, with assets of between US$100 million and US$1 billion, in South Africa at the end of 2012, reveals the data.
Cape Town wealthy individuals
Andrew Amoils, senior analyst and head of reports team, WealthInsight, says the number of millionaires in Cape Town saw growth of 6 percent over the past year and the Mother City also boasts 110 multi-millionaires (254 in Johannesburg) at the end of 2012.
Amoils says Cape Town’s economy is largely dependent on real estate, transport, fund management, retail and tourism industries and WealthInsight research shows that Cape Town millionaires have made the bulk of their wealth by buying and selling property, whereas Johannesburg millionaires have made most of their wealth via their profession.
According to WealthInsight, in 2011, Camps Bay had 13 UHNWIs and this went up to 14 in 2012, Clifton 12 in 2011 (11 in 2012), Bishopscourt in 2011, 10 and this stayed the same in 2012, Constantia and Tokai 9 in in 2011 and 10 in 2012, Bantry Bay and Fresnaye maintained the figure of seven in 2011 and 2012, and Llandudno had four UHNWIs in 2011 and 2012.
Suburb statistics
| Cape Town | No of UHNWIs (2011) | No of UHNWIs (2012) | No of R20m+houses for sale* | No of R20m+houses | Population (2012) | No of UHNWIs per unit of ppulation | No of R20m+ houses per unit of population |
| Camps Bay | 13 | 14 | 10 | 152 | 3 800 | 0.4% | 4.0% |
| Clifton | 12 | 11 | 18 | 95 | 300 | 3.6% | 31.1% |
| Bishopscourt | 10 | 10 | 13 | 84 | 1 520 | 0.7% | 5.5% |
| Constantia &Tokai | 9 | 10 | 11 | 75 | 8 820 | 0.1% | 0.9% |
| Bantry Bay | 7 | 7 | 10 | 67 | 1 050 | 0.7% | 6.4% |
| Fresnaye | 7 | 7 | 11 | 65 | 900 | 0.8% | 7.2% |
| Llandudno | 4 | 4 | 1 | 42 | 540 | 0.7% | 7.8% |
Source: all numbers from WealthInsight except 'for sale' stats * which were taken from Pam Golding website in May 2013.
Buying and selling property
Pam Golding Properties (PGP) reports a renewed interest in Cape Town property with foreign buyers paying from R2 million to R30 million for luxury homes in top suburbs including Camps Bay and Bishopscourt.
According to Laurie Wener, PGP managing director for the Western Cape, buyers come from European counties including the UK, Portugal, France, Belgium, Greece, Sweden, Austria, Germany and Norway, as well as from the USA, Australia and the Far East.
The falling Rand puts a pile of small change into foreign investor’s pockets, allowing them to buy this four bedoom farmhouse in Mowbray for only R2.85 million - an amount an investor with €1 million would have earned from June 2012 to June 2013 in Rands due to the currency’s devaluation.
“We have also seen a number of buyers from Nigeria, Angola and other smaller African countries and we believe their return to the market has been prompted by the weaker rand, which allows foreign buyers to capitalise on exchange rates and obtain attractive value for their currency.”
She notes that improved exposure for Cape Town in the international market has also contributed to the upturn in sales and many visitors, who came to the city initially as tourists, are now returning as buyers.
“The Atlantic Seaboard with its beautiful beaches and spectacular ocean views has always been popular among foreign buyers, and that has not changed,” she says.
To illustrate, she says since March 2013, they have completed 12 sales to international buyers in this area alone, stretching from the V&A Waterfront Marina to Camps Bay.
Foreign buyers tend to enjoy the cosmopolitan atmosphere and magnificent views offered by the City Bowl and because of its popularity it is limited only by its perennial shortage of housing stock due to high local demand.
Some buyers look to the Southern Suburbs and the Western Seaboard for homes to buy.
Most of these buys were for personal residential use, either on a full-time basis (relocating or retiring) or as part-time “swallows” who choose to escape the European winter and spend the summer months in South Africa instead, points out Wener.
However, there were a few buy-to-let investors although they remain highly conscious of potential rental returns as well as long-term potential for capital growth.
Pam Golding Properties sold a three bedroom penthouse at the V&A Marina for R25 million in April to a Nigerian national. This property was sold within a week of its listing.
“There is a sense of property being an attractive alternative for generating rental returns, as compared to current low interest returns on cash investments.”
Rand depreciation
The drop in the value of the Rand versus the US$, the Pound and the Euro has put an extra R2 million on average into the pockets of investors with one million in these foreign currencies, says Mike Greeff, chief executive officer of Greeff Properties, an exclusive Affiliate of Christie’s International Real Estate.
While PGP points to a stellar selling season, Greeff says luxury homes in Cape Town’s exclusive suburbs spend lengthy periods of time on the market as sellers sit tight to get their prices, however, these owners would be wise to take advantage of the current Rand value and market their homes abroad.
To better understand the economics of the Rand, Greeff says in June 2012, US$1 million would have yielded R8.45 million – in June 2013, that same US$ 1million would put R10.16 million into the investor’s pocket.
Last year in June, £1 million would have yielded R13.1 million, while in June 2013 it’s worth R15.76 million while June €1million bought R10.56 million, but in June 2013, the Euro holder scores R13.4 million, according to Greeff.
“For these individuals just with the extra change earned by the year-on-year drop in Rand value of one million in any of these foreign currencies could happily buy a spacious family home in the Southern Suburbs of Cape Town.”
Greeff points out that in Noorhoek for example, one can easily buy a five bedroom home with ocean views for R2.39 million, R2.5 million for a three bedroom house in Wynberg Chelsea and R2.499 million for a three bedroom family home in Newlands.
“We are starting to receive interest from the Eurozone, the US and the UK and are actively marketing to foreign investors through our affiliation with Christie’s International Real Estate,” adds Greeff. – Denise Mhlanga
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