It’s no secret that SA’s housing market has experienced a mini-boom over the past two years, fuelled by historically low interest rates and pandemic-induced changes to the way people live and work.
But there’s been a particularly interesting shift in home-buying patterns among SA’s cash flush. That’s evident from “The Africa Wealth Report 2022”, published recently by migration specialist Henley & Partners and wealth intelligence firm New World Wealth.
The report provides a comprehensive 10-year review of the luxury sector in Africa, including spending and investment trends among the continent’s high net worth individuals (HNWIs).
“Knowing where affluent individuals live, understanding their spending habits and being aware of their preferences is critically important to the providers of wealth management and luxury services,” New World Wealth head of research Andrew Amoils tells the FM.
As Amoils points out, millionaires tend to be extremely mobile, and the areas they choose to migrate to gain a notable economic advantage. Well-heeled residents do, after all, come with significant investment and spending power.
Key attractions for Hermanus include a less frenetic lifestyle, a well-maintained infrastructure, a low crime rate and a bustling commercial sector
— What it means:
Though the fortunes of SA’s HNWIs — those with net assets worth $1m or more — fell by 12% over the 10 years to end-2021, SA still ranks as the richest country in Africa when it comes to total private wealth.
The country clocks in at $651bn, more than double second-placed Egypt’s $307bn and nearly triple third-placed Nigeria’s $228bn. However, Mauritius is Africa’s fastest-growing wealth hub, with the balance sheets of the Indian Ocean island’s well-off residents ballooning by 74% over the same period.
SA is also still home to twice as many millionaires (39,300) as any other African country, and it ranks 28th in the world by this measure, ahead of Turkey, Argentina, Malaysia and Thailand, among others.
Amoils ascribes the drop in the value of SA’s wealthiest to a declining rand — from R8.10/$ at end-2011 to R15.90/$ at end-2021 — sluggish property prices in dollar terms, and ongoing emigration.
About 4,500 HNWIs have left SA over the past decade. Moreover, only five of a total of 15 SA-born billionaires still live in the country.
The key question is, where are the millionaires and billionaires who haven’t left SA shores choosing to live these days?
Joburg still reigns supreme as SA’s (and Africa’s) prime hotspot, in terms of both total wealth and number of HNWI residents. The city’s well-to-do residents typically congregate in Sandhurst, Hyde Park and Westcliff, according to the report.
Cape Town is placed second, with Clifton, Bantry Bay, Fresnaye, Llandudno, Camps Bay, Bishopscourt and Constantia singled out as the most prestigious areas in which to own a trophy home.
Joburg has also been the biggest loser in terms of declining wealth, with the value of the city’s private fortunes dwindling by 25% in dollar terms over the past decade — no doubt on the back of ongoing emigration and, more recently, semigration to other parts of SA.
The same trend is evident in inland cities such as Pretoria and Bloemfontein, where wealth has shrunk by 18% and 14% respectively over the decade. Even Cape Town has seen a 10% drop in wealth in that time.
In stark contrast, smaller towns along the western and southern Cape coast, as well as in the Cape winelands, have seen a wealth explosion in recent years.
The adoption of work-from-home policies has clearly accelerated the migration to smaller coastal areas, with many city dwellers exchanging the frenetic pace of big centres for a more relaxed lifestyle in scenic surrounds.
In fact, the wealth of the whale coast — notably Hermanus — has surged 32% over the past decade, making it SA’s fastest-growing moneyed hotspot (see graph). According to the report, this has been driven by a particularly strong influx of wealthy homebuyers.
The Cape winelands towns of Paarl, Franschhoek and Stellenbosch rank as the second-fastest-growing wealth hub in SA. The so-called golden triangle notched up 20% growth, followed by the Garden Route — Plettenberg Bay, in particular — at 18%.
Incidentally, Plett is SA’s third-most prominent location — after Joburg and Cape Town — for opulent mansions, with a tally of more than 150 residential properties valued at R20m-plus.
Umhlanga and Ballito, on the north coast of KwaZulu-Natal (KZN), have also recorded positive wealth growth over the past decade, albeit at a much lower rate of 2%.
Other up-and-coming (mostly coastal) towns to which the rich are increasingly migrating include Rooi Els, Betty’s Bay, George, Knysna, Wilderness, Nature’s Valley, Keurboomstrand and Mossel Bay in the Western and southern Cape, Kenton-on-Sea in the Eastern Cape and Zinkwazi Beach on KZN’s north coast.
What makes Hermanus so particularly appealing?
The pretty coastal enclave has traditionally been regarded as a retirement and second-home destination, especially among wealthy Afrikaners. But there’s been a noticeable shift in buyer demographics, says Annien Borg, Pam Golding Properties MD for the Boland and Overberg regions.
Hermanus has become the capital of the Overstrand and people no longer have to travel over the mountain for special products or services
— Annien Borg
She refers to statistics from data analytics group Lightstone, which show that, traditionally, only 23% of property owners in Hermanus were aged 18-49, while 37% were in the 50-64 bracket. The remaining 40% were older than 65. However, in the 12 months to April, 51% of property buyers in the area were aged 18-49, while the proportion of mature and retired buyers shrank to 32% and 17% respectively.
Borg says there’s no doubt that the widespread adoption of remote working, coupled with the ongoing semigration trend from Gauteng, has lured more younger buyers with schoolgoing children to Hermanus.
Key attractions for new entrants include a less frenetic lifestyle, less time spent in traffic, well-maintained road and other municipal infrastructure and a low crime rate. The influx of more permanent residents in recent years has also boosted the town’s commercial sector.
“Hermanus has become the capital of the Overstrand, and people no longer have to travel over the mountain for special products or services,” says Borg. “Yet the town is only a 90-minute drive away from Cape Town International Airport.”
Paul Kruger, licensee for Seeff Hermanus, agrees that the town is luring a much broader spectrum of buyers than has traditionally been the case.
Hermanus has excellent infrastructure, including good state and private schools, retail outlets such as the regional Whale Coast Shopping Mall, as well as various medical, sport and recreational facilities.
In addition, he says, it boasts a cosmopolitan lifestyle, offering a warm sea, attractive beaches and many restaurants, cafés, coffee shops and hotels overlooking Walker Bay, as well as easy access to top wine farms.
“Hermanus is also regarded as one of the best land-based whale spotting areas in the world,” Kruger adds.
The town has various housing price brackets, he says. Sought-after gated estates include Fernkloof Golf Estate, Hemel en Aarde Estate — set among the vineyards of the Hemel-en-Aarde Valley — and Benguela Cove Wine Estate on the Bot River lagoon.
Popular suburbs where standalone properties can be had roughly for R3m-R30m include Westcliff, Voëlklip, Kwaaiwater and Onrus.
According to Kruger, the highest price achieved to date in Hermanus was in 2018, when Seeff sold Marigold Cottage in Voëlklip for a record R35m.
However, Brett Sparg, MD of Lew Geffen Sotheby’s International Realty in Hermanus, says the town’s resurgence as a wealth hotspot and remote working destination has put pressure on housing supply and prices. “We are now starting to see stock shortages across a range of areas and price brackets,” he says.
The surge of new residents flocking to Hermanus in recent years is clear from Lightstone’s housing data, which shows that average house prices in Hermanus have spiked by a staggering 45% over the past three years — from R1.74m in 2019 to R2.521m in the year to date (see graph).
Last year, residential property sales volumes reached a four-year high of 29,233 — nearly double the 15,157 recorded in 2019 and just slightly below 2017’s peak of 34,201.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.