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Cape Town: Knight Frank's Wealth Report

May 3, 2014

Cape Town may well be home to some of South Africa’s most expensive residential              properties‚ but a swanky abode in the Mother City will still cost you less than a quarter of an apartment of similar size and quality in many other global property hot spots.In Knight Frank’s 2014 Wealth Report‚ the British-based property group provides a global perspective of the property investment patterns of the ultra-rich‚ and it showed that Monaco was still the world’s most expensive place to buy a luxury home.

 

Those who are keen to rub shoulders with Monaco’s rich and famous are prepared to fork out about $1m for a 15m² space‚ roughly a single garage’s size.Cape Town buyers still get much more bang for their buck‚ where $1m will buy you a 215m² apartment in a top-end suburb.Hong Kong‚ London‚ Singapore‚ Geneva‚ New York‚ Sydney and Paris also count among the world’s priciest real estate markets‚ according to Knight Frank.

 

While house prices were still falling in 29 markets last year‚ up from close to 40 in 2012‚ the main theme that emerges from our analysis is a widespread strengthening of values.The Wealth Report‚ which compares the performance of 90 luxury housing markets worldwide‚ shows that global property markets are bouncing back as residential property regains popularity as an asset class among the world’s superwealthy.

 

This is particularly true for markets that have been hardest hit by the financial crises‚ including Dubai‚ Ireland and Spain.About 20% of the 90 markets tracked by Knight Frank recorded double-digit house price growth last year‚ up from 15% in 2012.“While house prices were still falling in 29 markets last year‚ up from close to 40 in 2012‚ the main theme that emerges from our analysis is a widespread strengthening of values‚” said Liam Bailey‚ Knight Frank’s global head of research.

 

Global wealth creation that keeps growing‚ particularly in emerging markets‚ has been a key driver of demand for big-ticket residential properties as investors increasingly target tangible assets in safe haven markets‚ Mr Bailey said.Despite continued economic uncertainty in many countries‚ the number of ultra-wealthy investors rose by 3% worldwide last year.Well-heeled individuals with net assets of at least $30m increased by nearly 5,000 to more than 167,000 worldwide last year‚ Mr Bailey said.“They will want to invest some of that wealth in prime property.”While Asia’s growing domination of Knight Frank’s wealth rankings continues‚ the Middle East‚ Africa and Latin America are beginning to take the lead in terms of property investment.

 

The Indonesian city of Jakarta was the world’s best-performing housing market last year with average prices up a hefty 38%.Bali‚ also in Indonesia‚ came in at third place with growth of 22%. New Zealand’s prime markets have also strengthened significantly.The rebound in markets most affected by the downturn in 2008 continues.In the United Arab Emirates‚ Dubai last year added 17% to its 2012 gain of 20%‚ while prices in Dublin in Ireland‚ after tentative rises in 2012‚ climbed 18% last year.

 

Madrid has joined it as a key European market in recovery‚ with prices up 5%.Mr Bailey expected the ultra-rich to continue to increase their exposure to property this year‚ particularly through cross-border buying.The housing markets likely to benefit most from investors’ grown appetite for residential bricks and mortar are the US‚ the UK‚ Germany‚ Austria‚ Dubai‚ Ireland‚ Italy‚ Spain and Portugal.

 

Cape Town is placed 51st in Knight Frank’s global growth rankings‚ with upper-end house prices in the Mother City rising by an average 0.2% last year.It seems the city’s value proposition‚ particularly given recent rand weakness‚ has not gone unnoticed by international property buyers.

 

Estate agency Seeff reported a 50% uptick in sales to foreigners on Cape Town’s Atlantic seaboard and city bowl over the past 12 months.Foreign buyers in the wealthy suburbs of Clifton‚ Bantry Bay‚ Fresnaye‚ Camps Bay and the V&A Waterfront now make up more than 30% of sales‚ said Seeff luxury market specialist Lance Cohen.“Aside from UK and European buyers‚ we are seeing increased demand from African buyers as well as from the Middle and Far East‚ including the Chinese‚” he said.

 

Recent big-ticket sales in Cape Town include R55.86m for a luxury villa in Clifton Road in Clifton‚ R52.5m for a penthouse at the V&A Waterfront (Pinmore)‚ R34.5m for an apartment in Bantry Bay (The President)‚ R31m for a villa in Fresnaye (Ave Deauville) and R30m for a villa in Camps Bay (Theresa Ave).

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