Authored by the expert who managed and guided the team behind the South Africa Property Pack
Yes, the analysis of Cape Town's property market is included in our pack
What will happen in Cape Town’s real estate market? Will prices go up or down? Is the city still a hotspot for foreign investors? How is South Africa’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with real estate agents, property developers, and clients who buy properties in Cape Town, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property prices in the Winelands will rise steadily as more retirees move in
The Winelands region is becoming a hotspot for retirees, causing property prices to rise steadily.
Every year, around 150,000 retirees move to the Western Cape, many of whom are wealthy and attracted by the area's mild climate and excellent services. This influx is a key driver of the property market boom.
In towns like Stellenbosch, Franschhoek, and Paarl, property prices have surged by 53% to 119% over the last decade. In Stellenbosch, some homes now cost over R20 million, especially in sought-after neighborhoods like Brandwacht aan Rivier and De Zalze.
The Winelands' charm lies in its scenic beauty, with vineyards, wine farms, and mountains offering a peaceful lifestyle. Its proximity to Cape Town and the upcoming Winelands Airport add to its appeal.
Luxury retirement estates such as Val de Vie Evergreen in Paarl and Zevenwacht Lifestyle Estate in Stellenbosch are gaining popularity. These estates cater to retirees who enjoy fine wine and golfing, enhancing the region's allure.
With these factors in play, the Winelands is set to continue attracting retirees, which will likely keep pushing property prices upward.
Sources: Cape Chamber, Property Flash, Bizcommunity
2) Rental yields for coastal properties will increase as demand for holiday rentals grows
Coastal properties in Cape Town are experiencing a surge in rental yields thanks to a booming demand for holiday rentals.
In 2023, Cape Town had a record-breaking tourism season, with international visitor numbers jumping by 18% in December and continuing to rise by 13% into early 2024. This influx of over 1.2 million international arrivals has been a game-changer for the local rental market.
Tourists flocking to hotspots like Kirstenbosch National Botanical Garden and Chapman’s Peak Drive are driving up the need for nearby accommodations. This is especially true in coastal gems like the V&A Waterfront and Camps Bay, where average daily rates for vacation rentals have climbed, boosting rental yields.
Platforms like Airbnb are thriving in Cape Town, outpacing growth in other major cities. This shows a clear preference for short-term rentals, which is pushing rental yields even higher in these coastal areas.
Adding to the allure, Cape Town has been named Africa's Leading City Destination at the World Travel Awards for four years running. This accolade is a magnet for international visitors, further fueling the demand for holiday rentals.
With these trends, investing in coastal properties in Cape Town seems like a smart move for those looking to capitalize on the thriving tourism sector.
Sources: Super Shazzer, ATTA Travel
We have made this infographic to give you a quick and clear snapshot of the property market in South Africa. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Cape Town's property prices will keep rising due to limited land and high demand
Cape Town's property prices have been on the rise, and this trend shows no signs of slowing down.
From 2023 to 2024, the Western Cape, including Cape Town, saw an average property price increase of 7.7%. This upward trend is expected to continue into 2025, with forecasts suggesting a further rise of 3% to 7% in property values. The main driver? Cape Town's limited land availability. As the city grows, the scarcity of undeveloped land becomes more evident, pushing property prices higher due to the basic economic principle of supply and demand.
Another factor is Cape Town's growing population, which boosts the demand for housing. This is especially true in sought-after areas like the Atlantic Seaboard and City Bowl, where demand consistently outstrips supply. In these prime locations, significant price drops are unlikely, making them a hot spot for potential buyers.
The luxury property market in Cape Town is also booming, thanks to international buyers and investors. Areas such as Bishopscourt and Upper Constantia have witnessed record-breaking sales, further driving up property prices. This influx of high-end buyers adds another layer of demand, making the market even more competitive.
For those considering a property purchase in Cape Town, it's essential to understand these dynamics. The combination of limited land, a growing population, and a thriving luxury market creates a perfect storm for rising property prices. If you're eyeing a property in this vibrant city, acting sooner rather than later might be wise.
Sources: Cape Town Price Forecasts, Luxury Property Market in Cape Town, Cape Town Rental Yields, Statistics South Africa
4) Rental yields in older areas will drop as new developments provide better amenities
Cape Town is buzzing with new property developments.
In 2023, the Cape Town Central City Improvement District noted 30 fresh projects, including upscale residential and mixed-use buildings. This construction boom is backed by a hefty R7.285 billion investment in the Cape Town CBD, which is more than double what was invested the previous year. These projects aren't just about adding more buildings; they’re about offering modern amenities that attract tenants.
Take The Rubik mixed-use skyscraper and Neighbourgood 84 Harrington, for instance. They’re designed with features that enhance both lifestyle and business appeal. Think green spaces, top-notch security systems, and luxurious finishes. These align perfectly with Cape Town's reputation as a lifestyle and business hub, making them highly attractive to potential tenants.
People are increasingly drawn to these modern amenities. In areas like Century City, rental investors are seeing the best returns in complexes that offer these conveniences. This preference is evident in the higher occupancy rates of newer developments compared to older neighborhoods. The number of residential units in the Cape Town CBD hit an all-time high in 2023, showing a strong demand for these modern living spaces.
Rental yields in older neighborhoods are expected to decline as newer developments offer more modern amenities. This trend is clear when you look at the numbers: newer complexes are filling up faster, leaving older areas struggling to keep up. The shift is not just about the buildings themselves but the lifestyle they offer, which is increasingly important to today's tenants.
Sources: Cape Business News, Cape Town Central City Improvement District (CCID), Everything Property
5) Demand for affordable urban housing will rise as more young professionals move in
Cape Town's job market is booming, especially in tech and creative fields.
With the city adding 43,000 new jobs in late 2023, young professionals are flocking to Cape Town for better career opportunities. The tech scene is thriving, growing at over 8% annually, and there's a high demand for skills like software development and AI.
Local universities and colleges are seeing more enrollments, which means more graduates are entering the job market and looking for places to live. These young professionals are drawn to urban living for its lifestyle perks, like being close to work and enjoying a vibrant social scene.
The big issue, though, is housing affordability. 90% of households find inner-city property unaffordable, with most places aimed at tourists. This makes it tough for young professionals to find affordable housing in the city.
As rental prices in suburban areas rise, the demand for urban housing is increasing. Young professionals are looking for affordable options in the city, but the shortage is a real challenge.
Sources: Moneyweb, Nucamp, Invest Cape Town
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6) Demand for rentals near schools will grow as more international students arrive
Cape Town is becoming a hotspot for international students, especially at the University of Cape Town.
With nearly 5,000 students from over 100 countries, 18% of the student body is international, creating a buzz around housing needs. This surge is particularly felt near educational institutions, where students are eager to find a place to stay.
Universities in Cape Town are struggling to house everyone on campus, so off-campus housing demand is booming. Areas like the Southern Suburbs and the CBD are popular among students, both local and international, looking for accommodation.
The private sector is jumping in, developing new housing projects in neighborhoods like Newlands, Rondebosch, and Mowbray. This shows a growing opportunity in the rental property market for those interested in investing.
International students often prefer off-campus housing due to limited on-campus options, which drives up demand for rentals near universities. Real estate agencies are noticing this trend, with rental rates reflecting the high demand.
Looking ahead, the South African government's plan to increase university enrollments to 1.6 million by 2025 suggests that this demand for student housing will keep rising. It's a promising time for property investors in Cape Town.
Sources: University of Cape Town, Seeff, Cape Town CCID
7) Demand for homes with outdoor spaces and wellness facilities will grow as health awareness increases
In Cape Town, health consciousness is on the rise, especially in 2023 and 2024.
Thanks to initiatives like the Western Cape on Wellness program, people are more aware of the importance of staying healthy. This program focuses on promoting healthier lifestyles and reducing non-communicable diseases, which has led to a noticeable shift in lifestyle choices.
Outdoor fitness is becoming a big deal. Companies like Green Air have seen a surge in demand for outdoor gym equipment, showing that more folks are taking their workouts outside. Cape Town's stunning landscapes and great weather make activities like hiking, cycling, and running even more appealing.
When it comes to buying property, people are now looking for homes with outdoor spaces and wellness facilities. Real estate reports highlight a strong demand for homes with gardens or near parks. This trend is all about wanting a healthier lifestyle and the perks of being close to nature.
Developers are catching on, too. There's a growing trend of building residential areas with integrated wellness facilities, like gyms and yoga studios, to meet this demand. This shift is driven by the desire for convenient access to wellness options.
Increased health consciousness is clearly influencing the real estate market, with more people seeking properties that support a healthy lifestyle. Access to outdoor spaces and wellness facilities is becoming a top priority for potential buyers.
Sources: Western Cape Government, Green Air, Global Wellness Institute
8) Demand for properties with shared amenities will grow as community living becomes more popular
Properties with shared amenities are gaining popularity as community living trends rise.
In bustling cities like Cape Town, the co-living market is booming. Places such as Curiocity and Capehavana are becoming hotspots, driven by a growing demand for affordable urban living. With property prices climbing, especially in areas like Cape Town, Johannesburg, and Durban, co-living offers a cost-effective alternative. In the Western Cape, for instance, rents have surged by nearly 10% year on year, making shared amenities an attractive option.
Millennials and younger generations are leading the charge towards community-oriented living. They crave spaces that offer more than just a roof over their heads. Co-living spaces provide shared common areas and communal activities, which enhance social interaction and mental well-being. Social media is also playing a role, highlighting the perks of community living and sparking interest in these spaces.
In Cape Town, developments like the Galleria precinct and Neighbourgood are setting the trend with shared amenities such as gyms and pools. These facilities not only offer convenience but also foster a sense of community. People are drawn to the idea of living in a place where they can connect with others while enjoying modern conveniences.
Moreover, co-living complexes often embrace sustainable practices, sharing resources like water and electricity. This approach appeals to those who are keen on eco-friendly living solutions. The idea of reducing one's carbon footprint while enjoying a vibrant community is a strong selling point for many.
As community living trends continue to rise, properties with shared amenities are becoming the go-to choice for many. The combination of affordability, flexibility, and a sense of belonging makes co-living an attractive option for those looking to buy property in the country.
Sources: Devmark, Curiocity, GQ, Capehavana, Precision Reports
We made this infographic to show you how property prices in South Africa compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Tech-savvy buyers will be drawn to virtual reality tours as a common tool for property viewings
Virtual reality tours are now a staple in property viewings, especially for those who love tech.
Back in 2023 and 2024, the virtual tour market was on fire, with predictions it would hit USD 12,345.5 million by 2033. This boom was fueled by a 29.3% annual growth, showing how quickly VR tech was catching on in real estate.
Cape Town was buzzing with tech energy, becoming a hotspot for skills like software development and AI. This made it a natural fit for virtual reality tours, as the city was ranked the 14th fastest-growing tech city globally. The tech-savvy crowd there was all about embracing new solutions.
Real estate agencies in Cape Town, like Virtual Media, jumped on the bandwagon, offering slick virtual tours to make properties pop. This wasn't just a local trend; globally, companies like RealTourVision rolled out subscription-based models to make these tours more accessible and budget-friendly for real estate pros.
These innovations made it a breeze for buyers to check out properties from afar, matching the growing trend of preferring virtual tours over in-person visits.
Sources: Market.us, Nucamp, Virtual Media
10) Eco-friendly developments will attract green-minded buyers to the West Coast
The West Coast of Cape Town is becoming a hotspot for eco-friendly developments.
People are increasingly drawn to this area because of the growing demand for sustainable housing in South Africa. This trend is fueled by a rise in environmental awareness and supportive government initiatives. As more individuals become conscious of their environmental impact, the allure of eco-friendly homes continues to rise.
A shining example of this movement is the Fynbos Building, developed by Lurra Capital. It's celebrated as Africa’s first biophilic structure, featuring innovative eco-friendly solutions like solar panels and rainwater harvesting systems. These features are setting new standards for urban living and sustainability, making such properties highly attractive to buyers who prioritize environmental responsibility.
Government incentives have been pivotal in promoting green building practices. The South African government, in collaboration with the World Green Building Council and the Green Building Council of South Africa, has significantly increased the number of certified green buildings. This has led to substantial savings in electricity, water, and waste management, further enhancing the appeal of eco-friendly properties.
These developments are not just about saving resources; they are about creating a lifestyle that aligns with the values of environmentally conscious buyers. The West Coast is becoming a place where people can live in harmony with nature while enjoying modern comforts.
As the demand for sustainable living grows, the West Coast is poised to become a leading destination for those seeking eco-friendly homes. This area is attracting buyers who are not only interested in a home but in a way of life that supports the environment.
Sources: Infrastructure News, Trade.gov
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.