When the going gets tough the rich snap up luxury homes for up to R100m

Affluent South Africans and foreigners are pouring their money into trophy homes for a semblance of stability in tough economic times, driving a recent up-tick in the sale of properties in the R10m-R100m bracket.

Property experts are seeing the trend play out not only in the Western Cape, traditionally the province of choice for the wealth brigade, but also in Gauteng's swanky areas such as Sandhurst, Hyde Park and Waterkloof and KwaZulu-Natal's upper Morningside, Umhlanga and Ballito.

A recent sale saw a German buyer pay R75m for his dream holiday home in Bantry Bay, in the Western Cape, which comes with five bedrooms, a state-of-the-art kitchen, elevated pool deck with panoramic ocean and mountain views, lift, media room and gym.

Yael Geffen, CEO of Lew Geffen Sotheby's International Reality, told the Sunday Times that during times of economic uncertainty, investors are drawn to the historic stability of residential property.

“This is especially true of the more resilient luxury market which traditionally offers solid returns well above the current interest rate.

“During the first two months of 2023, our two highest sales were an estate home in Constantiaberg for R28m and a house in Plettenberg Bay for R25.6m.”

Geffen said in the northern suburbs of Johannesburg, this sector is being driven by an influx of wealthy investors from other African countries, “many of whom perceive this area to be a financial safe haven”.

The latest Africa Wealth Report — by Henley and Partners and New Word Wealth — shows there are about 3,700 homes in South Africa valued at more than $1m (over R18m) as at December 2022. 

New World Wealth researcher Andrew Amoils said the rand's depreciation has seen the number of million dollar or more homes  decline from 4,250 in 2012 to the current 3,700 properties.

The report says just over 40% of South Africa’s million-dollar homes are in the “Prime Seven” suburbs of Cape Town — Bantry Bay, Bishopscourt, Camps Bay, Clifton, Constantia, Fresnaye and Llandudno.

He said 10 years ago the figure stood at 50% and decreased “due to strong growth in this price segment in smaller towns such as Hermanus and Plettenberg Bay”.

Andrew Golding, CEO of Pam Golding Property, said luxury properties in Gauteng were faring well.

Golding said recent transactions included the sale of a home in Waterkloof for R19.5m.

“Sales have occurred in the market just under the R10m mark in an excellent location on the golf course in Silver Lakes and in Southdowns Estate.”

In Johannesburg a Sandhurst home was sold for R50m — the registration of which was concluded in February — while a Hyde Park home was snapped up for R25m in June last year.

“Sandhurst remains a popular luxury market and we have concluded a significant  number of luxury sales, including high-value sales in Cleveland Road and Empire Place, while in Hyde Park we have seen activity in Helling Road and Rulin Road. 

Golding said with an increasing number of wealthy  individuals, entrepreneurs and executives seeking luxury living, sales have topped R370m in the past year at Steyn City, with six freehold homes achieving between R20m and R50m. 

He said Durban is also riding the luxury property wave.

“In Durban there is the advantage of selling expansive luxury properties at a significantly lower price when compared to similar properties in the Cape.

“In Zimbali in the past six months, we have concluded several sales in the R12m-plus mark, the same as in the previous six months.

“R104m in sales was achieved at Zimbali in the past year.” Golding said this figure was on par with previous years; “however, we are busier this month than in the previous month”.

Sought-after addresses include Hawaan Estate, Izinga Estates, The Gardens (estate), upper La Lucia apartments and blocks of flats on the Umhlanga promenade.

Basil Moraitis, regional manager for Pam Golding Properties in the Western Cape, said: “We experienced a busy festive trading season on the Atlantic seaboard with sales to the value of R200m concluded during December (2022) alone, and including high-end sales from R20m upwards.

“A relatively new trend is buyers from Finland looking for a bolt hole far away from the conflicts and war in Eastern Europe.”

Samuel Seeff, chair of the Seeff Property Group, said while the super wealthy continue to live in Johannesburg's northern suburbs and Pretoria East, many are investing in second homes in Cape Town. 

“Most notably, where they may spend around R10m on a home in Sandton, they will spend upwards of R40m in Cape Town.

“While Cape Town sales above R20m reached record highs during the 2021-2022 Covid boom, only a handful of luxury buyers paid above R50m with only two sales reaching R100m, the highest being R150m in Clifton.”