Africa Top Homes: Cape Town & Nairobi

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02 Aug 2012

Prime property in the world’s key cities recorded the strongest growth since 2010, according to the Knight Frank Prime Global Cities Index Q2 2012 report.

Of the 27 global cities surveyed, Africa’s two top cities feature in the top 10 list with Nairobi in Kenya at number 3 (21.8 percent) and Cape Town in South Africa at number 10 (4.1 percent).

The value of prime property in the world’s key cities rose by 1.4 percent in the second quarter of 2012, says Kate Everett-Allen from Knight Frank International Residential Research.

Of the 27 global cities surveyed, Africa’s two top cities feature in the top 10 list with Nairobi in Kenya at number 3 (21.8 percent) and Cape Town in South Africa at number 10 (4.1 percent).

Bangkok in the Asia Pacific beat Nairobi to top spot in the second quarter, recording a 28.8 percent price growth.

Nairobi ranked number one in the previous quarter, with prime property prices having grown by 24 percent, made it the strongest performer in the last 12 months as recorded in Q1 of 2012.

In Q1 2012, Cape Town was in the ninth position recording 2.9 percent growth.

Click here to read the article.

Everett-Allen reports that since its low in Q2 2009 the Prime Global Cities Index – which tracks the performance of the top 5 percent of mainstream housing markets – has been largely subdued, recording average quarterly growth of 0.8 percent.

She says prime prices in Asia rose by 3.4 percent in the year to June (-2.5 percent in March) and prime prices in Europe rose by 1.3 percent in the year to June, an improvement on the -3.4 percent recorded in the year to March.

The report reveals that Asia’s resurgence in the second quarter can largely be attributed to the strong performance of its emerging markets, namely Jakarta and Bangkok, rather than its traditional powerhouses of Singapore and Hong Kong.

The growth in Europe’s prime prices has taken place despite – or possibly because of – the deepening Eurozone crisis.

An interior view of a typical upmarket and modern Atlantic beachfront apartment is an example of a sought-after luxury home for short-term rental.

With the prospect of more bailouts looking increasingly likely, prime buyers and investors seem to have separated European cities into different tiers.

Buyers and investors are no longer just concentrating on those cities that attract a high level of international demand and a good quality of life, but the latest results suggest they are increasingly seeking prime property in those cities best sheltered from the EU debt debacle, she says.

Cities such as London, Geneva and Zurich are all positioned in the top half of the Q2 results and in the top 10 cities, having recorded annual price growth of 10.5 percent 6.0 percent and 5.9 percent.  

According to James Price, of Knight Frank’s International Residential Development team, the positive performance of some of the more established cities in Europe and the US suggests that a ‘flight to safety’ remains the defining characteristic of international purchasers and investors.

“The appeal of cities in stable economies is being brought into marked contrast with the investment environment in weaker countries,” says Price.

Price points out that this city-level data should not be taken as a reflection of the whole country, as prime second-home destinations outside the cities may still perform well in a poorer performing wider market.

Knight Frank says they are unlikely to see significant sustained growth in prime markets given the numerous downside risks facing the global economy.

Europe’s economic frailty together with the introduction of more protectionist measures in Asia (aimed at improving affordability for domestic buyers), is expected to inhibit price inflation within both the mainstream and prime markets for the remainder of 2012, according to Knight Frank.

Buying a home in Cape Town

The City of Cape Town is believed to be the solid part of the Western Cape property market with the more affordable segments driving price growth.

Nairobi ranked number one in the previous quarter, with prime property prices having grown by 24 percent, made it the strongest performer in the last 12 months.

This was revealed in the FNB Western Cape House Price Index Q2 2012 report, which showed a year-on-year growth rate of 8.7 percent.

Click here to read the article.

Pam Golding Properties (PGP) says the South Peninsula region of Cape Town, with towns such as Noordhoek, Fish Hoek, Kommetjie and Muizenberg saw a steady increase in residential sales activity over the past year. 

PGP area manager for the South Peninsula, Sandi Gildenhuys, explains that the increasing sales figures are particularly pleasing given the ongoing turmoil in the global economic climate.

She says buyers remain cautious about over-extending themselves and are keenly aware of value for money.

However, she notes there is also a sense that property is a ‘safe’ investment in the current market, with good long-term growth prospects. 

“There is a definite awareness that the South Peninsula in particular offers good value for money, a great lifestyle and an ideal environment in which to raise a family.  

Demand is seen in the sub R2 million price range with some buyers snapping up homes priced between R5 million and R15 million in Simon’s Town and Noordhoek.

Gildenhuys says foreigners are making a come-back, although the bulk of buyers are South Africans, mainly Capetonians or up-country buyers relocating from Gauteng or looking for holiday homes at the seaside.

Set on over 1 660 square metres, this five bedroom Noordhoek home is selling for R13.995 million through Pam Golding Properties.

Expatriate buyers are eyeing Simon’s Town and these are buyers still living overseas who intend returning at a later stage for retirement.

Many of these expats work elsewhere in Africa and visit home regularly, so will use the properties as holiday homes in the interim. 

Meanwhile, Brynn Tomes, chief executive officer and founder of the BIP group which is partnered by Rawson Properties’ Sea Point franchise specialising in short term rentals for luxury sectional title and freestanding homes on the Atlantic Seaboard reports a boom in short rentals with homes fetching high prices.

Tomes says despite global economic problems, demand for luxury homes to industry and finance moguls and super-rich European and American holidaymakers has been so good that in the coming summer months they could well be facing a serious stock shortage.

“Cape Town, with its congenial weather and lifestyle is seen by many foreigners as the ideal base from which to expand into Africa and they are increasingly evident in the rental market,” says Tomes.

He points out that being mostly senior executives that are accustomed to comfortable homes, they tend demand the best and are prepared to pay anything from R1.2k R120k per day for their units. 

Tomes is quick to add that the latter price is not a thumb suck, it was actually achieved on a Clifton home.

The rental home came with extras such extras as a car, a chauffeur, a butler, a cook and housemaids.

Rentals of R30k to R40k per day have been regularly achieved over the past years, add Tomes.- Denise Mhlanga

About the Author
Denise Mhlanga

Denise Mhlanga

Property journalist at

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