Cape Town remains a sought-after destination for property investment, with its abundance of natural beauty and an unmatched quality of living that presents both a blessing and a challenge when it comes to property development.
The scarcity of available land has led to a growing trend in vertical development, resulting in an influx of exciting developments in the city and surrounding neighbourhoods, and a surge of sectional title properties entering the market.
There has never been a more opportune time to explore the investment potential of sectional titles, which offer an affordable, practical solution in a desirable yet spatially limited city.
AFFORDABILITY AND INVESTMENT POTENTIAL
Affordability is a significant advantage for investors looking to enter the Cape Town property market, with sectional title properties often coming to market at a more accessible price compared to freeholds or larger developments.
Foreshore Place, Cape Town City Centre - This modern, stylish one-bedroomed apartment in a central, secure building, is perfect for investors, couples, or solo travellers who want to experience the best of city living. R1 767 000. View here.
This affordability, coupled with the potential for strong rental returns, makes them an appealing option for both first-time buyers or investors and those looking to diversify their portfolios. Cape Town's allure as a global tourist destination further strengthens the investment case for sectional title properties.
HIGH RENTAL DEMAND AND TOURISM
Our beautiful, unique city attracts a steady stream of local and international tourists throughout the year, as well as digital nomads who work remotely. This creates a consistent demand for short-term rental accommodation and holiday rentals in and around the city, generating attractive yields and potential capital appreciation.
40 ON L, Bo-Kaap – Ideal for a young professional seeking a starter home or an investor looking for great earning potential, this one-bedroomed apartment is situated in a secure block with a prime location and desirable amenities. R2 650 000. View here.
The rental market is thriving, driven by factors like semigration and buyers choosing to rent before committing to a property purchase in their desired area. The recent 50 basis point increase in the repo rate, which took the prime interest rate to 11.75%, has further fuelled demand for rentals, not due to sales market distress but rather as a strategic choice.
INVESTMENT OPPORTUNITIES AND RENTAL YIELDS
For buy-to-let investors seeking attractive rental yields, sought-after areas like the Atlantic Seaboard and City Bowl can offer yields ranging from 4% to 6%, depending on the property, according to Property24.
Son Vida, Green Point – A modern, one-bedroomed apartment with sleek finishes and stunning waterfront views in the desirable Green Point area. R2 695 000. View here.
There is high rental demand, demonstrated by stock shortages, in Observatory, Woodstock and the Southern Suburbs, particularly in the R10 000 to R35 000 per month price range.
Obs Court, Observatory – Located close to the city and UCT, this modern, two-bedroomed apartment in a secure block, is an ideal purchase for the buy-to-rent investor. R 1 750 000. View here.
The Herschel, Claremont Upper – This stylish, contemporary two-bedroomed apartment is in a secure block with a rooftop pool and 24/7 security. An investment on this level can attract high rental yields. R3 300 000. View here.
Despite higher property purchase costs, Cape Town continues to attract millennial buyers and investors, who accounted for almost 40% of sales in the CBD over the past year. The CBD offers hidden gems priced between R1.2 million and R1.5 million in new developments with highly desirable amenities.
BlackBrick, St Georges Mall, Cape Town City Centre: There are two modern studios, on the sixth floor and eighth floor, with views of the city and Table Mountain, for R1 299 000 each. View these here and here.
Millennial buyers have distinct preferences when it comes to property investment, and having grown up with technology, convenience is a top priority. Factors such as location, energy efficiency, home office space, technological amenities, and low-maintenance outdoor areas are viewed favourably.
A PRIME TIME TO INVEST
Cape Town's limited land availability and the surge in sectional title property developments have created a prime opportunity for real estate investors. The thriving rental market in Cape Town, driven by semigration and lifestyle choices, offers a reliable income stream for investors with the potential for high rental yields and attractive returns. These factors make investing in sectional title properties a sound financial decision as they offer both a practical living solution and a profitable long-term investment.