Africa free trade agreement lights up the luxury market in Jo'burg
Category News
That's the word from Rory O'Hagan, CEO of the Luxury Portfolio® division of the Chas Everitt International property group, who says high-end buyers from other African countries, China, India and Russia have been particularly active in the sector lately, along with local investors involved in infrastructure development, communications and logistics who are committed to remaining in SA and now seeking to buy well-priced properties after a year or two of being out of the market.
"Most of these buyers are looking beyond the current state of the local economy to the opportunities inherent in the AfCFTA, and moving fast to secure themselves a residential 'base' in Johannesburg, which is recognized internationally as the most industrialised and financially sophisticated city in Africa, and centrally located in global terms, so best-placed to enable them to gain access to those opportunities.
"And as a result we have seen a sharp turnaround in luxury home sales, especially by our Luxury and New Developments company and Sandton & Hyde Park sales team. For the past three months, these two teams have been selling more than R100m a month worth of luxury apartments and houses in Johannesburg's northern heritage suburbs. That is quite a contrast to the first half of this year when all the talk among luxury property owners was about emigration, the market was oversupplied with the homes of those wanting to leave SA, and sales were really sluggish."
He says there is still a certain element of "bargain buying" from certain luxury sellers who are still determined to emigrate and have accordingly lowered their prices, "but this is definitely not the case in the new development space, and no longer the predominant purchase driver in the pre-owned space, where there has been a really significant uplift in sales of clusters and freehold homes at prices up to R20m.
"What we are also seeing is a definite shift in demand away from the traditional sources of foreign buyers in SA, which have primarily been the UK and the EU, and towards other countries with better-performing economies - and a rapidly rising number of globally-minded business leaders and other high net-worth individuals who are constantly looking for new projects, contracts and markets across the world."
There is also a growing African and South African awareness, says O'Hagan, of just how lucrative the AfCFTA could be, and not only to the suppliers of consumer goods to Africa's $3,3trillion market. "To make the AfCFTA work, for example, governments and private sector investors and contractors will need to work together to build up and maintain the supporting infrastructure, a continent-wide framework of road, rail, energy, digital communications, logistics and financial networks, and there are massive, multibillion dollar prospects just in this phase.
"Next will come the opportunities for SA-based manufacturing and service companies to expand into the African market while others build local import-export and logistics empires supplying both Western and Eastern countries with African products. And in this whole process, Johannesburg has the potential to become a really global financial and business hub, in much the same way as London, New York, Shanghai and Singapore became global cities, with an importance and relevance way beyond their own countries.
"In fact, we can already see this happening as high-end buyers and corporations line up to buy luxury apartments in Sandton and surrounding areas like Melrose, Rosebank and Hyde Park to give themselves or top executives a Johannesburg base of operations for doing future business in and into Africa."
At the same time, he says, an increasing number of wealthy home buyers from Africa, China, India and Russia are now seeking to relocate permanently to Johannesburg, with some demand spilling over to big "port" cities such as Cape Town, Durban and Port Elizabeth, "and it is interesting that these buyers are not overly concerned about our low economic growth, unemployment, power supply problems or investment ratings.
"Perhaps as a result of experiences in their own countries they often actually see huge commercial potential in possibly helping to solve these problems, and we can see this view stating to come through some of the multibillion rand investment pledges made during President Ramaphosa's second SA Investment Conference recently .
"Encouragingly, we are also seeing quite a number of top SA investors starting to take a leaf out of their book and look at the bigger prospects for SA in the context of Africa over the next few years. This will no doubt have further positive effects on the luxury property market - and on the rest of the residential market in due course."
Meanwhile, says O'Hagan, Chas Everitt International is working to maximise all the benefits it offers to high-end clients as the SA affiliate of Leading Real Estate Companies of the World® and its luxury property division Luxury Portfolio International®.
"As part of this global network we have genuine connections with the best real estate companies and access to the top property investors in more than 70 countries (see https://www.leadingre.com/
Issued by Chas Everitt Luxury Portfolio®
For more information contact
Rory O'Hagan on 083 328 8888
Or visit https://chaseveritt.
*China currently has the second-highest number of dollar millionaires in the world (4,45m individuals) and according to the latest Credit Suisse Global Wealth Report, the country now has more "wealthy" people (100m) than the US (99m).
Chas Everitt International is the SA affiliate of Leading Real Estate Companies of the World® and its luxury property chapter Luxury Portfolio International®. The LeadingRE network spans 70 countries and links more than 565 independent brokerages with an exceptional commitment to service and integrity, who sell more than $370-billion worth of properties annually. The 200 members of the Luxury Portfolio International® division have a global audience of three million affluent investors and market some 50 000 properties a year, at an average price of $2,6m.
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Author: Meg Wilson