As your go-to source for information on South Africa’s growing economy and real estate markets, we thought it was important to share seven key real estate trends that savvy investors should look for in 2019.
1. Sectional Superiority
Rapidly growing cities and economies, concerns of affordability, and a relatively young population have all contributed to a high demand for sectional title developments such as condominium units. A report from Pam Golding Properties indicated that over the past two decades, flats and townhouses have comprised nearly 27 percent of newly completed buildings in South Africa, but over the past three years a whopping 63 percent of residential development units which they financed were sectional title units. In 2019, we expect to see a continued increase in the demand for condos and similar properties.
2. Riding the Wave of Optimism
Sandra Gordon, Senior Research Analyst at Pam Golding Properties, confirmed that thanks to the election of South African President Cyril Ramaphosa, “the outlook for the economy in general, and the housing market in particular, is undoubtedly much improved.” We expect this optimism to carry into South Africa in 2019 thanks to a number of key economic factors that indicate further economic growth. These include steady GDP growth, lower forecasted unemployment rates, an increase in business confidence, and favorable trade numbers.
3. The Surge in Tourism
With beautiful beaches, a rich historical and cultural climate, and one of the most diverse ecosystems in the world, South African tourism is on the rise. As more individuals set their sights on the beautiful African country in 2019, local and foreign investors will continue to pay attention: “holiday homes and apartments for sale can result in a steady income, especially if the properties are located along the coast.”
4. Retirees Increase Demand
The preferences of retirees may be shifting, with more individuals downsizing to residential properties instead of moving into retirement housing or age-specific communities. According to Lightstone, “Cape Town shows its biggest growth in property buyers over the age of 55 – 65 as well as 65 and older, indicating that an older generation is looking to establish themselves in this province for what we can assume to be for retirement.” With more seniors choosing new homes over retirement-specific communities, demand for housing will likely grow.
5. South Africa Goes Green
Nicholas Stopforth’s group, Amdec Property Developments, is currently developing Cape Town’s first environmentally-friendly mixed-use development—Harbour Arch. According to Stopforth, in 2019 and beyond, “modern trends in development and construction [will] predominantly [focus] on issues relating to sustainability...Everything about development today is about sustainability and about energy-wise innovation, water-saving technology, heat-reducing aspects, and the like. And when you use sustainable technology, you also reduce the cost of occupation long term and obtain a competitive edge.” In 2019, we expect South African homebuyers to continue embracing sustainable, eco-friendly developments.
6. Luxury Lives On
In 2018, Cape Town earned recognition as the second-fastest growing luxury real estate market in the world. Yet, Cape Town isn’t the only South African city with a luxury market that’s booming. The Pam Golding Property Group notes that the Gauteng market recently experienced “heightened activity and interest from serious buyers across all price bands, including the luxury market above R10 million.” In 2019, we are optimistic that luxury real estate in key South African markets will continue to perform well.
7. A Fresh Face
The Real Estate Activities in South Africa 2018noted that the past year was characterized by an increasingly high demand for urban renewal and regeneration projects. In 2019, we expect governments to continue investing in the health of their cities—especially hotspots such as Johannesburg, Durban, and Cape Town—by offering tax incentives to arrest urban decay and encourage development.
According to Jason McCormick, managing director of McCormick Property Development, “developers are more inclined to spend money in reinventing property, rather than building on new land. In the development of institutional rental housing stock, there is a strong drive towards the redevelopment of inner-city office blocks into accommodation across the spectrum.”
Real Estate Trends Excite Investors
If these key trends are any indicator, now is the perfect time to diversify your portfolio with exclusive investment opportunities in South African real estate. To learn more about the economic climate and how you can take advantage of our unique co-investment opportunities, subscribe today.
