Becoming part of the Cape Town property market can be both thrilling and financially rewarding. Cape Town’s known for its unique blend of culture, scenic beauty, and bustling neighbourhoods. The city offers a wealth of opportunities for savvy investors. But where do you begin, and what should you avoid?
Owning property in Cape Town will always be beneficial. It is a well known fact amongst people living in Cape Town that having property in the Mother City can be an extremely profitable endeavour.
Nancy Oeschger, real estate agent at Tyson Properties Atlantic Seaboard explained that if you are a young adult, who is working with a smaller budget and still trying to get your foot in the door, investing in property rather than something like a car can be extremely beneficial long-term. Most people buy their first investment property between the ages of 25 and 30.
“Young adults are more focused on creating long-term wealth, rather than satisfying fleeting desires,” Nancy states. Therefore if you are a young adult, her advice is to invest in property rather than buying something like a car, if you can.
When you buy a car, the value will depreciate the minute you drive it off the showroom floor. And that is one of the positive aspects of buying the right property as an investment, it doesn’t lose its value.
Filipe Espinha, real estate agent and shareholder at Tyson Properties Southern Suburbs explained that property is an asset that actually grows over time. “Owning property is something that will always appreciate in value,” Filipe said.
Ultimately, the measure of a good investment is in the numbers. Then, look closely at the property’s location and future growth prospects. Proximity to schools, shopping centres, and business hubs often boosts tenant demand and property value.
It all comes down to the area you choose. Each area has its own rhythm, appeal, and market conditions. Filipe explained that, “You need to invest in an area that you can see growing in the next few years.”
For example, if you are going to buy in an area like Woodstock, an area that has seen a lot of regeneration and development in the last few years. Spending R1 million now would mean that your property would be worth a lot more in the next 2-3 years.
The vibrant Atlantic Seaboard, with neighbourhoods like Sea Point and Camps Bay, is perfect for investing. Especially if you are considering getting into the Airbnb market, the City Bowl would be an excellent investment, Filipe stated.
Unlike other suburbs, the Atlantic Seaboard can be a bit more welcoming towards Airbnb investments, Filipe continued.
Before investing, what you should do is look at the market in its current state. “I’m always transparent and open with my clients. We can try and predict, but at the end of the day, we don’t know how the market is going to react,” said Nancy.
When considering buying your first property investment in Cape Town, start by educating yourself on the city’s diverse neighbourhoods. Beau Steyn, real estate agent at Tyson Properties Northern Suburbs emphasises that if you are considering getting into the property investment scene, his number one piece of advice is to do research. “Do your due diligence,” Beau stressed.
Not doing research on all possible factors and just diving in head first is a pitfall that some first-time investors make. Beau stated, “Do not rush the process.”
Rather take your time and make a good investment that will appreciate in value. Overcapitalising can become a potential pitfall if you’re not smart with your investment, Filipe explained.
Evaluate Cape Town’s long-term growth prospects in that area. Some neighbourhoods benefit from new infrastructure projects or increased amenities, which can significantly boost property values over time. Properties in areas like the Atlantic Seaboard that remain popular with both locals and tourists are likely to retain their value and rental demand. Nancy suggests getting an experienced agent to get you a report on the area you are interested in investing so you are able to see how it’s been performing.
While the city’s property market has experienced steady growth, don’t bank solely on property values skyrocketing.
With the recent decline in interest rates and the expectation for a further drop early 2025, now is the best time to buy property in Cape Town. “I’m positive that it’s gonna come down, but there is no crystal ball that’s gonna tell us,” said Nancy.
Focus on properties with strong rental demand that will provide consistent income. Consider who your tenants might be and where they want to live, for example, students at UCT. Nancy pointed out that one thing that people are underestimating is student accommodation.
While an area like Century City has also been growing in the last few years and has become popular for young professionals.
“It all depends on what you want to achieve as an investor,” Filipe said.
Calculate all possible costs, from maintenance and taxes to periods when the property may be vacant. A property that covers its expenses with rental income, even after all costs, is your best bet for stability in Cape Town’s market. Remember, positive cash flow today means more room for growth tomorrow. With a clear financial plan, you’ll be ready to tackle the market with confidence.
Our final piece of advice is, don’t be swayed by what everyone else is saying. Do your own research and get an experienced agent to guide you on this journey. Investors should open up their eyes to all areas of Cape Town. Because of semigration, certain areas are becoming more popular, so you might regret not buying in those areas later on.
Investing in Cape Town’s real estate can be incredibly rewarding when approached thoughtfully.
Cape Town’s blend of opportunity, culture, and natural beauty makes it a prime location for building your real estate portfolio.
This article was proudly sponsored by Abrahams & Gross Attorneys.
