The most expensive square metres of prime property in the world

It is quite easy to make the bull case for Cape Town residential property.

Firstly, Cape Town regularly features in the list of the most beautiful cities in the world and it is a beneficiary of both well-heeled foreigners seeking a second home as well as ‘semigrants’ escaping other parts of the country.

Secondly, on many metrics, Cape Town truly does appear to offer great value for money. With $1 million you can buy a generous 218 sqm of prime property in Cape Town versus a meagre 17 sqm in Monaco.

Thirdly, post the GNU we are starting to see “animal spirits” revive in the country and this should have a knock-on effect on all domestic asset classes.

But with the boom-bust in Sandton office property only recently behind us, could we also not see the beginnings of South Africa’s next property bubble?

Why do I say this?

The amount of new stock entering the market in the Atlantic Seaboard/CBD is reaching staggering proportions. For example:

– 11 new blocks going up on a 4km stretch of Victoria Road between Bakoven and Bantry Bay (millionaire’s row) alone
– A further 2 kilometres down the street, at a SINGLE intersection in Sea Point, 2 recently completed apartment blocks (and a further 2 in progress),
– 3 new apartment blocks EACH spanning the size of an entire city block in the CBD, amongst others

It is also worth bearing in mind that regulations around Airbnb listings in Cape Town are lax and tightening them would be poor for property prices.

Cape Town has more Airbnb listings than some far larger tourism hotspots, and there may be a backlash against Airbnb’s impact on longer-term rentals at some point.

Net-net I am still a believer in Cape Town property, but it may be time for certain players to start exercising restraint.