Country Guides Country Guide: South Africa

Date Published:

02/06/2008

South Africa, the host nation to the 2010 FIFA World Cup, is a country whose property market is exciting great interest among foreign investors.

The Market- Cape Town

South Africa is a country on the up, and it's hosting of the 2010 World Cup will shine a global spotlight on the country. GDP growth has averaged 4.1% per annum since 2000 (5% in 2006), variable interest rates are at their lowest since the early 1980s, and unemployment is steadily falling.

That's not to say it doesn't have its problems. Crime is a big issue across the country. Most people live in gated and manned communities, and armed patrols are routine- but the issue is being addressed. In Cape Town, crime has been reduced by 90% since 2000 through the introduction of a "clean and safe" policy. The programme, supported by the business community, has brought life back to the central business district (CBD).

"Eight years ago, much of the CBD was boarded up and very few people lived here," says Andrew Boraine, chief executive of the Cape Town Partnership, an organisation charged with leading the process of urban regeneration in the central city. "Nowadays, approximately 7,000 people live in the CBD, office vacancies are only 4% (it was 25%) and 3,000 new apartments have been built or renovated in the last two years."

Property in Cape Town's CBD includes 180 apartments built at the stylish Mandela Rhodes Place, a courtyard atrium with restaurants, wineries and boutiques. Prices start from R1.8m (£128,500). A rental pool is in operation, offering a two-year guaranteed rental income of 8% gross. Phase two, a 5-star hotel in which apartments will be sold fractionally, is scheduled to open in 2009.

Such has been the city's renaissance over the past few years, apartment prices at Mandela Rhodes Place have increased by £40,000 since the off-plan sales price of late 2005. The appreciation is repeated across the city. "Capital growth has on average been 35% per annum in recent years in Cape Town," says Frank Gormley, chairman of Eurocape, the developer of Mandela Rhodes Place. "Over the next five years, I predict prices will rise stratospherically by around 20% a year." However Cape Town is not alone in experiencing a booming housing market over the past half-decade.

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