Luxury property market soars as the rich fall in love with expensive stuff all over again

The uber rich in South Africa are back to splashing out on high-end brands now that the pandemic is over, but for many their biggest purchases are exclusive properties that offer opulent privacy.  

“We are seeing a growing demand for all things luxury in the country,” says Michael Zahariev, co-founder of Luxity. “At the beginning of the pandemic there was a slight drop in demand, but the luxury sectors are now back and outperforming pre-pandemic levels.”

Despite warnings of a global recession, there is no sign that the rich are reining in spending; on the contrary, indications are that the luxury sector is set to continue growing.

“We have seen a definite change in the spending habits of the one-percenters away from luxury experiences into luxury goods,” says Zahariev. “This trend began during the pandemic due to lockdown restrictions, but has remained strong. It would seem it has reignited the fondness for the love of things rather than the love of experiences, whereas the opposite was true pre-pandemic.”

But what are the super-rich spending their money on?

“Louis Vuitton is by far the most recognisable and searched luxury brand in South Africa. Being the most searched and, by extension, popular, adds to a level of desirability that appeals particularly to 'new money'. Chanel is just as popular and, of course, watches are a must-have. Rolex remains highly sought after,” says Zahariev.

Collecting art, watches and cars remains a popular pastime and having the right space to display these collections is a priority, so high-end properties are still in demand, with many buyers preferring cash sales.

“There has been an influx of interest over the past year in the high-end luxury market,” says Jodi Smith from Team Hot Prop of Remax South Africa. “These deals take time as the buyers are very particular in what they are looking for. When they find it, they are willing to pay cash to make sure they get what they want.”

Smith says reasons for purchasing vary. “Some see these properties as investments, others are buying the lifestyle. In many cases they fall in love with the property and are willing to do anything to secure the deal just to have it. Properties that are able to show off art and car collections are in big demand.”

Lew Geffen Sotheby’s International Realty estate agent Kim Cooper says these buyers are looking for the unique. “That third or fourth vacation home that offers unmatched luxury and, of equal importance, a unique lifestyle experience, is what it is about.” 

She says buyers place emphasis on being able to relax and unwind in their new homes and luxury properties in faraway places are sought-after.

A case in point is a gentleman's estate situated on a dam in Mpumalanga that’s on the market for R51m and features a sauna, gym and entertainment centre. “This would be a one-of-a-kind vacation home for the purchaser, allowing the owner to spend a few days bass fishing in absolute privacy and tranquility,” says Cooper.

In Cape Town, says Smith, a buyer who was looking for a penthouse in Clifton decided to purchase the entire building to ensure absolute privacy and exclusivity.

Luxury homes in areas such as Franschhoek, Stellenbosch, Hermanus, Plettenberg Bay and Knysna are in demand, according to Grant Smee, CEO of Frankie Bells Property, the luxury division of Only Realty Property Group, because they deliver privacy and exclusivity.

“Many wealthy local buyers are choosing to remain in South Africa for reasons such as a good quality of life and how far their rand can stretch. While in the past we saw buyers prioritising convenience, we are now seeing a trend towards prioritising space and lifestyle in their search for luxury property,” he said.

“The top end of the [property] market usually bears the brunt of a tougher economic climate and this was certainly the case just before and during the pandemic,” says Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg. “There has, however, been a discernible uptick in demand for luxury homes this year. The activity is healthy.”

Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, agrees, saying the company’s sales in the R10m-R20m price band almost doubled this year, breaching the R1.5bn mark.

“Real estate has shown remarkable resilience over the years, defying the odds and major disruptions to become the world’s biggest store of wealth,” he says. “By the end of 2020 the global value of real estate had reached a record high of $326.5-trillion, making it more valuable than all global equities and debt securities combined, and almost four times greater than global GDP.”

Lightstone data shows 984 homes valued at more than R10m were sold in South Africa last year, the highest number in recent years.

“It is all about the whole-life concept,” says Rory O’Hagan, head of the Chas Everitt Luxury Portfolio division. “This is the reason high-end lifestyles estates such as Blair Atholl, Dainfern, Waterfall and Val de Vie continue to do well. There is a definite rise in demand for luxury, high-rise developments in areas close to Sandton that offer a range of onsite amenities, as well as proximity to upmarket shopping malls and entertainment facilities.” 

According to Smee, wealthy buyers in Gauteng increasingly favour “estate and country living” to the hustle and bustle of city life. Luxury lifestyle estates less than an hour’s drive from  Johannesburg or Pretoria are in hot demand, with Midrand’s Kyalami Estates and Waterfall Estate favourites. Buyers in Gauteng are still very crime-conscious and, in most cases, opt  for homes in security estates rather than freestanding homes. 

The Western Cape is the leader in the luxury property market, boasting some of the most expensive real estate in the country, including a recent home that went on sale in Clifton for R172.5m. It remains the city of choice for the uber-rich, with sea views and proximity to Clifton and Camps Bay among major attractions.

A lack of supply in the most desirable neighbourhoods has driven up prices. In Constantia, the average price rose more than 10% over the past year, say agents Claude McKirby and Arnold Maritz from Lew Geffen Sotheby’s International Realty. 

KwaZulu-Natal’s luxury property sector took a significant hit in 2021 after the riots, says Smee. “Having said that, however, homes in areas such as Umhlanga and Ballito are still selling for as much as R31m. The abundance of excellent private schools in the province has contributed to demand, with parents wanting to be close for their children coming from boarding schools over weekends.”

For the most part, property prices have remained stable.  Most agents attribute this to continued interest from foreign buyers who see South Africa as offering value for money.

“These buyers enjoy South Africa for its natural beauty and generally temperate winter climate,” says Smee. “The exceptional views, high-end design, extensive security measures and proximity to breathtaking attractions are drawcards.”

Many wealthy people realise their privileged position and the difficult circumstances that prevail in South Africa. According to Hein Klee at Nedbank Private Wealth, such people are willing to help vulnerable communities.

The latest Nedbank Giving Report found that in 2021 83% of South African high net worth individuals gave “approximately R4.2bn in cash, R2.6bn in of goods and services, and 3.2-million hours in physical volunteerism”, he says.

This was about R2bn less than the cash contributions made in 2018, the last time the Giving Report survey was undertaken.