In a world where high-net-worth individuals (HNWIs) seek not only luxury but also strategic investment opportunities, a new trend is emerging – acquiring homes on multiple continents to diversify property assets across the globe to offset volatility in traditionally stable markets.
According to the latest Lightstone report, foreign interest in South African residential property has been steadily rising since 2019.
While Gauteng has the highest number of foreign buyers, the Western Cape dominates big-ticket sales, constituting 64% of luxury foreign sales this year. This trend is evident in Cape Town, particularly in sought-after areas, where sales to foreign investors have surged post-pandemic.
Joanna Thomas, Constantia area specialist, and Stephan Thomas, Constantiaberg secure estate specialist for Lew Geffen Sotheby’s International Realty, report a significant uptick in foreign buyer interest, with several high-ticket sales in the Cape Town area over the past year.
Geopolitical changes spark re-evaluation
Historically, HNWIs, particularly those from Europe, favoured investing in luxury properties within their own continent and cities like London, Paris, and Monaco have held a timeless appeal.
However, recent geopolitical uncertainties, economic fluctuations, and shifts in global dynamics have compelled investors to rethink their real estate portfolios.
“Traditionally seen as a safe haven for real estate investments, Europe has recently encountered challenges, leading high-end investors to reassess their options. Factors such as economic instability, changing regulatory landscapes, and events like Brexit contribute to this shift in perception,” says Stephan.
“Multicontinental property portfolios offer a hedge against economic uncertainties in any single region and offer an opportunity to capitalise on the unique advantages and growth potential of different markets.”
Caution to the wind?
Stephan notes the intriguing shift in foreign investor sentiment – from excessive caution to a lack of concern about the challenges facing South Africa.
“In the past, a water shortage or a bit of civil unrest would send international investors running for the hills, but these days, when you ask active buyers about their concerns or risk aversions, they have very few.
“The current view, especially among HNW buyers, is that the Cape Town property market remains highly attractive, relatively affordable by international standards, and there is little concern regarding currency stability, civil unrest, service delivery, or political stability and they are happy to spend up to R25m or even more.”
Joanna agrees observing a growing number of HNW buyers willing to take what they see as a calculated risk.
“We often hear these buyers say they are investing in a lifestyle and, in a post-pandemic world, are embracing living more in the moment. With traditionally ‘safer’ global investment options losing stability, Cape Town is considered a top destination for diversifying.”