How to make strategic investment decisions in the Cape Town property market

Thanks to its good governance, breathtaking sights, solid infrastructure and stunning real estate, the Cape Town property market is seen by many as the ultimate real estate investment destination in South Africa.

Real estate investors who have the knowledge and resources to get into this lucrative market can reap the benefits both in the short term with high rentals and in the long-term ownership of a valuable asset.

Location, location, location 

This old real estate adage remains true, and some quick research will show you that different areas of Cape Town will be the right choice for different investors, based on your budget, preferences and aims. High-end investors looking for holiday homes may be attracted to areas like Llandudno, Camps Bay and Constantia, while those looking for a suburban buy-to-let investment may be attracted to areas like Blouberg, Milnerton or Fish Hoek. 
If you’re looking for an investment property to live in, you’re spoilt for choice, with seaside havens, chic urban ambiences and countryside retreats all being part of the City of Cape Town’s offering. Factors to research before choosing your specific neighbourhood include crime, possible future developments in the area and rules and regulations pertaining to home renovations and upgrades.

Property trends in Cape Town in 2023

With post-COVID semigration not showing signs of slowing down, Cape Town and its surrounding small towns remain sought after. The steep rise in interest rates, which can be partly attributed to the outbreak of war in Ukraine, has led to buyers being extremely cautious. Smaller, more affordable properties are trending and buy-to-let investors should be aware that features like security, fibre-readiness and outdoor areas are sought after by Cape Town tenants.

Is it a good time to invest in property in Cape Town?

Real estate in South Africa as a whole remains a stable and worthwhile investment. Investments in bricks and mortar have proven themselves to mature over time, but part of the answer to this question lies in your personal circumstances. To invest in the Cape Town property market, you’ll need a stable income and a good credit rating in order to be able to apply for a home loan. You can use the array of property investment tools available to plan your investment. Looking beyond your personal circumstances, Cape Town boasts a stable and diverse economy, which makes it an ideal location for investment. 

Why are Cape Town properties so expensive?

Cape Town is well known for two things: its beauty and its high real estate prices. A large part of the reason for this is simple geography. Given that the city is surrounded by mountains and the ocean, there is little space for new developments and the principle of supply and demand comes into effect. With that said, there are some lovely areas of Cape Town where investment opportunities abound and property prices are much lower than other areas. For a few examples, look at Durbanville in the northern suburbs, Sunningdale in Blouberg, Fish Hoek and Muizenberg. The post-COVID era has seen a clear trend of increased migration to the Western Cape, mainly from Kwazulu-Natal and Gauteng.

Work with an experienced property practitioner

In the dynamic Cape Town property market, having an experienced property practitioner by your side is invaluable. He or she will share their in-depth knowledge of whichever area of Cape Town you’re considering investing in and should be able to give you an idea of how investments in that specific area have been appreciating in value. A couple of other practical tips include using a bond originator to obtain your home loan and using Seeff’s handy range of calculators to work out how much you can afford and what the monthly repayments on your investment will be.